Microsoft Xbox is closing multiple studios and consolidating teams to cut costs

Microsoft Xbox is shutting down a number of game studios, including Arkane Austin, making it the latest publisher to close studios amid signs of gaming slowing down.

Studios such as Tango Gameworks, which makes “Hi-Fi Rush,” based in Tokyo, and Canada-based Alpha Dog, will also close and some employees will be laid off, Matt Botti, head of Xbox Game Studios, said in a note. Reuters viewed it on Tuesday.

Xbox did not comment when asked about the number of employees affected by the layoffs.

Growth in personal computing and console gaming is expected to remain below pre-pandemic levels as gamers spend fewer hours playing due to weaker release schedules, according to data from research firm Newzoo.

Botti said the “reprioritization of titles and assets” is intended to enable Xbox to invest heavily in its portfolio of new games and intellectual property.

All affected studios are parts of ZeniMax Media, which Microsoft acquired for $7.5 billion in 2021, and Bethesda.

Microsoft’s Xbox Content and Services segment last month reported a 62% increase in third-quarter revenue, thanks in large part to its acquisition of Activision Blizzard.

Take-Two Interactive, maker of Grand Theft Auto, said it will close two subsidiary studios as part of mass layoffs, Bloomberg News reported last week.

Microsoft previously laid off 1,900 employees at Activision and Xbox at the beginning of the year.

Some Arkane Austin developers will join other studios to work on projects from Bethesda, maker of the “The Elder Scrolls” and “Fallout” titles.

The servers for the game “Redfall”, created by Arkane, will remain available online for players. (Reporting by Zaheer Kashwala in Bengaluru; Editing by Shaunak Dasgupta)