Microsoft has shut down several Bethesda-owned game studios, including Hi-Fi Rush developer Tango Gameworks and Redfall maker Arkane Austin, to shift focus to its “priority games.” The Xbox parent is also shutting down Alpha Dog Games, creators of the Mighty Doom mobile game, while Roundhouse Studios, which also contributed to the development of Redfall, will be absorbed by ZeniMax Online Studios. The development, first reported by IGN, was confirmed by affected studios Tango Gameworks and Arkane in separate X posts late Tuesday. The closures come months after Microsoft announced layoffs at Xbox and Activision Blizzard earlier this year, making 1,900 roles redundant.

IGN reportciting an internal email to employees sent by Xbox Game Studios head Matt Buti said the closures would result in “significant redundancies,” but Microsoft has not yet confirmed the number of roles affected.

Bethesda-owned Arkane Studios, which consists of the Arkane Lyon and Arkane Austin teams, confirmed to X that the latter will be shutting down and ceasing all development on their latest game, Redfall. The vampire shooter will not receive any more updates, but its servers will remain online for active players, the studio said.

Redfall was released in May 2023 to largely negative reviews, leading to Microsoft Gaming CEO Phil Spencer taking “full responsibility” for the game’s disastrous launch. However, Spencer defended developer Arkane Austin at the time and promised that Xbox would continue to work to improve the game.

While Redfall fell short of expectations, Hi-Fi Rush was, in Microsoft’s own words, a “breakthrough hit” across “all key metrics and expectations.” Aaron Greenberg, VP of Xbox Games Marketing, had said last year that Microsoft “couldn’t be happier” with Tango Gameworks’ rhythm-action title. Still, the studio didn’t survive the latest round of layoffs. Tango Gameworks confirmed on Tuesday X that the studio will close, thanking players and announcing that its previous games, which include The Evil Within series and Ghostwire: Tokyo, will remain available and playable on all supported platforms.

An internal email from Booty cited in the report said the shutdowns will help prioritize “high-impact titles” and continue investment in “blockbuster games” from Bethesda. Without specifying a number of the resulting layoffs, the email said: “This re-prioritization of positions and resources means that several teams will be reallocated to others and that some of our colleagues will leave us.”

“We are making these difficult decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority plays,” the email added.

Microsoft has yet to make an official announcement about the layoffs, but the company will hold an Xbox Games Showcase event on June 9, where it will reveal its upcoming lineup of exclusive and third-party titles.

The latest round of layoffs follows a string of layoffs this year at major studios like Riot Games, Eidos-Montréal, Sony, Electronic Arts, Embracer Group, Take-Two Interactive and others. Back in January, Microsoft laid off 1,900 employees at newly acquired Activision Blizzard and Xbox — an eight percent cut from its overall gaming division.

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