Xbox Game Studios Restructures Amid Layoffs, Shuttering Arkane Austin and Tango Gameworks

In a surprising shake-up at Microsoft’s gaming division, Xbox Game Studios announced a major internal restructuring today that includes significant layoffs and the closure of several development studios—most notably Arkane Austin and Tango Gameworks. The move comes as Microsoft looks to streamline operations and refocus its gaming strategy following its blockbuster acquisition of Activision Blizzard.

According to an internal memo obtained by multiple outlets, the closures are part of a broader initiative to align Xbox’s resources more strategically with future priorities. Arkane Austin, the studio behind last year’s critically panned “Redfall,” and Tango Gameworks, best known for the breakout hit “Hi-Fi Rush,” will be shuttered effective immediately. Other affected studios include Alpha Dog Games, the mobile-focused developer behind “Mighty Doom.” Roundhouse Studios will reportedly be absorbed into ZeniMax Online Studios to support “The Elder Scrolls Online.”

The layoffs have sparked concern and confusion among fans and developers alike, especially considering Tango Gameworks’ recent success with “Hi-Fi Rush,” which received both strong reviews and fan enthusiasm. The Tokyo-based studio had also been one of Xbox’s few footholds in the Japanese market, and its sudden closure has raised questions about Microsoft’s long-term commitment to nurturing diverse talent globally.

Matt Booty, head of Xbox Game Studios, stated in the memo that the decisions were “not taken lightly” and were made to “prioritize high-impact titles and further invest in blockbuster games that players love.” However, critics argue that shuttering a studio with recent hits undermines confidence in Microsoft’s ability to support creative, lower-budget titles alongside larger tentpole releases.

Employees impacted by the layoffs are being offered severance and career transition assistance, though the total number of jobs eliminated has not yet been confirmed.

With this restructuring, Microsoft appears to be doubling down on risk-averse strategies in favor of guaranteed high-return franchises. It’s an ominous sign for experimental and AA-tier projects, and it leaves many wondering what the future holds for Xbox’s ambitious plans to offer a diverse range of gaming experiences.