Xbox president Sarah Bond has responded to questions about Microsoft’s decision to shut a number of much-loved studios this week, insisting it was about ensuring the Xbox business remains healthy for the long-term during what she called “this moment of transition.”

Microsoft shocked the gaming world when it announced the closure of Redfall and Prey developer Arkane Austin, Hi-Fi Rush and The Evil Within developer Tango Gameworks, and more in devastating cuts targeted at Bethesda owner ZeniMax.

Microsoft bought ZeniMax Media, the parent company of developers like Bethesda, Arkane, id Software, and more, in 2021 for $7.5 billion. Since then, it has bought Call of Duty maker Activision Blizzard for $69 billion.

In an email to staff sent by Matt Booty, head of Xbox Game Studios, Microsoft blamed the cuts on a “reprioritization of titles and resources.” In the email, first reported by IGN, Booty said: “we are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.”

Microsoft has faced widespread criticism from the development community and Xbox fans following the move, with many pointing out that Hi-Fi Rush was a critically acclaimed and, according to one Xbox executive, hugely successful release.

Not enough?#HiFiRush #TangoGameworks https://t.co/3OLhYAPbxU

— KazuakiEgashira (@ega1002) May 9, 2024 Speaking in an interview with Bloomberg’s Dina Bass at Bloomberg Tech in San Francisco, Xbox president Sarah Bond was first asked about the video game industry’s current lack of growth — a troubling factor Xbox boss Phil Spencer pointed to recently when asked for an explanation for Microsoft’s decision to cut 1,900 staff from its gaming business.

“You know, the last year or so in video games, largely the industry’s been flat,” Bond replied. “And even in 2023, we saw just some tremendous releases, tremendously groundbreaking games. But still, the growth didn’t follow all of that. A lot of that’s related to our need to bring new players in and make gaming more accessible. But all of that has been happening at the same time that the cost associated with making these beautiful triple-A blockbuster games is going up, and the time it takes to make them is going up.

“And so, so much of our focus as Xbox is about how we do things to help the industry all up, while also ensuring that our brand, everything that we do, is there through this moment of transition.”

“It’s always extraordinarily hard when you have to make decisions like that. Bond was then asked directly about this week’s decision to close ZeniMax studios. Responding, she pointed to the industry’s current failure to meaningfully grow its audience, and a desire to ensure Xbox survives this “transition.”

“You know, it’s always extraordinarily hard when you have to make decisions like that,” Bond said. “I’ll go back to what I was saying about the industry. And when we looked at those fundamental trends, we feel a deep responsibility to ensure that the games we make, the devices we build, the services that we offer are there through moments, even when the industry isn’t growing and when you’re through a time of transition. And the news we announced earlier this week is an outcome of that, and our commitment to make sure that the business is healthy for the long term.

“But that said, our commitment to having our own studios and working with partners to have games large and small, we’re a platform where you can play GTA, but you can also play Palworld, where you can play Call of Duty and you can also play Pentiment, that doesn’t change. And frankly, our commitment to Bethesda and the role that it plays is part of Xbox and everything we do.

“It’s actually been pretty fantastic. I don’t know if you’ve gotten a chance to check it out. The Fallout TV show was on Amazon and it’s been great to see people fall in love with that universe, but also what it’s done for the games themselves and people going back and exploring everything that’s inside of that. There’s some other great things that are coming from our studios later this year. Indiana Jones and the Great Circle. I was a big Indy fan growing up. It looks like you were two, so you should check that out.

“But really right now for us and our teams, our focus is on the people impacted and doing everything that we can do to help them through this hard transition.”

Bond was then asked specifically about the closure of Tango Gameworks in the context of Hi-Fi Rush’s success, and how it can be possible that a studio behind an award-winning, apparently commercially successful title can be closed just over a year from release.

Here’s Bond’s response:

“You know, one of the things I really love about the games industry is it’s a creative art form. And it means that the situation and what successes for each game in the studio is also really unique. There’s no one size fits all to it for us. And so we look at each studio, each game team, and we look at a whole variety of factors when we’re faced with making decisions and tradeoffs like that. But it all comes back to our long term commitment to the games we create, the devices we build, the services, and ensuring that we’re setting ourselves up to be able to deliver on those promises.”

“We look at each studio, each game team, and we look at a whole variety of factors when we’re faced with making decisions and tradeoffs like that. Bond’s answer here is already going viral for failing to properly address the issue at hand. As IGN has reported, Xbox leadership held a town hall meeting with ZeniMax staff on Wednesday, May 8, and during it attempted to answer key questions around the decision to close Bethesda studios. IGN understands Booty told staff the closure of Arkane Austin was not about the failure of last year’s disastrous Redfall, rather about the future prospects of the studio. Bloomberg’s Jason Schreier has reported that ZeniMax was under pressure to make significant cuts, and chose Tango Gameworks and Arkane Austin because they were in the process of pitching projects that would have required increased investment, rather than studios already working on greenlit games. One person in attendance at the meeting told IGN that the suggestion was that because these studios were currently pitching new games, they had the weakest legs to stand on when it came to picking who to cut.

In the town hall meeting, Booty reiterated that Hi-Fi Rush was a success, but, according to a person in attendance, staff were told the factors for that success had changed in the year since, and so the studio’s prospects had lowered. As has been reported, Tango Gameworks had pitched Hi-Fi Rush 2 as a follow-up project. IGN understands the Hi-Fi Rush 2 pitch was rejected in part because it was deemed too expensive.

Underpinning all of this is concern about the overall health of the Xbox business and the wider gaming industry. Microsoft, currently worth more than $3 trillion, faces declining revenue year-over-year for its gaming business when Activision is taken out of the equation, as well as stagnant Game Pass subscriber growth. Sales of Xbox consoles have collapsed at a time when development costs are rising. Add this to reported increased internal scrutiny on Microsoft’s gaming business following the Activision Blizzard acquisition, and you have a recipe for disaster.

Image credit: Bloomberg Live / YouTube.

Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].