Xbox needs a change of leadership

It's time for Phil Spencer and the rest of the management team to step aside

Xbox

Yesterday, Xbox closed four studios: Dishonored’s Arkane Austin, Hi-Fi Rush’s Tango Gameworks, Alpha Dog Games, and Roundhouse Games. Hundreds of jobs gone and projects killed in utero, at the click of an executive’s fingers.

Microsoft spent $7.5 billion to acquire ZeniMax Media, the parent company of Fallout studio Bethesda, in 2021, when Arkane Austin and Tango Gameworks were already neck-deep in their existing projects. 

Just over a year after the release of Hi-Fi Rush, which Xbox itself said “was a break out hit for us and our players in all key measurements and expectations”, the studio is no more. 

Almost a year to the day after the launch of Redfall, and before the studio even got the chance for a redemption arc with its underperforming open-world game – despite having massive updates and DLC almost ready to go – Arkane Austin is also no more. 

Arkane and Tango were not given a fair shake. Neither of them got to make an original game under the banner of Microsoft, with Microsoft’s full financial backing. Microsoft spent $7.5 billion to acquire Bethesda and spent the next few years parading its library of IP – an acronym that makes me throw up in my mouth – around as key to the future of Xbox. Showing them off – Dishonored, Prey, The Evil Within, and Hi-Fi Rush included – as more content for the content pipeline. Please wear your bibs. 

Xbox + Bethesda: 2024 pic.twitter.com/DCxME3fpLQ

— Team Respawn (@TeamRespawnTV) May 7, 2024

In October 2023, Xbox’s acquisition of Activision Blizzard added more meat to the feeder. More titles it could claim as its own. Overwatch, Diablo, and even Call of Duty are now Xbox-published games – and for the cool, cool price of $68.7 billion. That’s approximately enough to pay everyone at Arkane Austin an annual salary of $100,000 for 4,600 years. The cost of keeping these four studios alive is nothing to Microsoft, which has a value larger than the GDP of Canada, Russia, or Spain. 

When he was booted from Activision, Bobby Kotick, a man who allegedly threatened to murder his former assistant, got a golden parachute of $350,000,000 – enough to keep Arkane and Tango afloat for the next two decades. If this were about the art of video games and creating original experiences, or protecting genre, culture, and legacy creatives, Microsoft would find a way. 

Tango Gameworks

Arkane is one of the only remaining triple-A studios with the chops and the will to create big-budget immersive sims like Dishonored and Prey. Arkane Lyon might have been saved by its current project, Marvel’s Blade, but the two studios have always worked in symbiosis, sharing expertise and feedback between their offices. Tango Gameworks is best known for its survival horror series The Evil Within, but it’s also proved it has range with the action horror game Ghostwire: Tokyo and rhythm action game Hi-Fi Rush. Killing these studios is bad for the industry. That’s without even getting into the fact Tango is a Japanese company with unique insight into a market Xbox has tried and failed to crack. I guess they don’t care about Japan anymore, but who knows – it’s hard to keep track of what Microsoft believes in because management U-turns more than a gymkhana driver. 

All of this is a problem Microsoft created for itself. The company found itself behind Sony and Nintendo, which were producing high-quality first-party games at a fair rate. Xbox couldn’t keep up. Multiple big exclusives – Everwild, Perfect Dark, Fable, and State of Decay 3 – have been languishing in development for much longer than expected, and titles Xbox has actually put out – Halo Infinite and Crackdown 3 – haven’t exactly set the world on fire. To make up for that, Xbox threw a hail mary with Game Pass, a Netflix-style subscription service that allowed players to pay a monthly fee for access to hundreds of games. For players, it’s great. For developers, it turns their art into content. 

You’re far more likely to try something if it’s on Game Pass, but it also didn’t cost you anything. If it doesn’t grab your attention immediately, you’ll likely turn it off and download something else. Does this hurt developers? No one knows. Xbox hasn’t been transparent about what counts as success for a developer – is it downloads on Game Pass? The dreaded “engagement metrics”? Sales outside of Game Pass? Not even Xbox’s developers know the answer. That’s why Xbox can get away with saying “Hi-Fi Rush was a breakout” hit before sacking everyone. 

This will eventually impact how games are made – if it hasn’t already – outside of changing which games publishers are willing to bet on. It’s already happened in the music industry, where artists have begun moving their hook closer to the start of their songs to catch the attention of our distracted generation, saturated by experiences and entertainment as we are. Xbox’s strategy drags us closer to this future with every desperate grasp. 

Bethesda

Some of my fondest memories of games as a kid are about the ritual of getting something I’d never heard of, reading the manual on the bus journey back, and spending weeks obsessing over it. Games were precious to me then. We couldn’t afford many. These days they feel more like disposable e-cigs. Inhale them, blow them out, chuck them in the trash. But here are two studios – Tango and Arkane Austin – whose games people love. They’re niche, but the people who love them really love them. Original games with distinct flavors and personalities, worked on by some of the industry’s best. A huge get for any publisher who cares about the art form. Phil Spencer is throwing that away so a line can go up more quickly on a financial graph. The next time he talks about how much he loves games, remember this. 

These executives are paid enough to sustain a small city and don’t have a clue. No one has a clue. Not me, not the executives, not the analysts. Everyone’s just pulling guesses out of their buttholes. No one expected Manor Lords, Vampire Survivors, Helldivers 2, or Lethal Company to be huge PC hits. No one called it because no one understands the market. That’s because the market doesn’t know what it wants. 

Gamers just know they don’t want faster horses – they want gaming’s equivalent of the car. They want innovation. They want surprises. New experiences or unique twists on established genres. They want casual games. They want hardcore games. They want it all and more. They want stuff no one’s ever imagined. With the closure of these studios, Xbox has made the industry a more boring, risk-averse space. Tango and Arkane are masters of underserved genres and we will be worse off without them. 

There’s a clip from an Xbox documentary doing the rounds on social media from just two years ago, where current and former executives claim one of Xbox’s “biggest missteps” was shutting Fable developer Lionhead. 

lol. lmao pic.twitter.com/5s1GsUAd7X

— Alex Donaldson (@APZonerunner) May 7, 2024

“You acquire a studio for what they’re great at now, and your job is to help them accelerate how they do what they do, not them accelerate what you do,” Xbox head Phil Spencer says in the clip. I’m at the point where I’m struggling to believe anything these people say. 

Here’s the thing, too: if you’re thinking, “What about accountability? What if these companies aren’t profitable? They’re running a business after all.” Well done, you’re a corpo. But also, by that same metric, where’s the accountability for the Xbox management team? 

How can you preside over such an embarrassing and public failure of leadership like this without consequence? Phil Spencer and his team are paid ridiculous amounts of money because they’re held responsible when things go wrong. If these studios have failed by their metrics, the management have failed by everyone else’s. They’ve failed to protect their staff, they’ve failed to protect profit margins, they’ve failed to spend responsibly, they’ve failed to protect the company image, and they haven’t even succeeded in releasing any damn video games. It’s time Microsoft got some fresh blood.