Why Xbox closed Tango Gameworks and Arkane Austin

Why did Xbox just close down 3 studios? The reason is a combination of economics and strategic trajectory.

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Days ago, Xbox surprised fans by closing down numerous first-party studios. Tango Gameworks, who had just released the mega-popular Hi-Fi Rush, was shut down alongside Arkane Austin, the team behind Dishonored and Prey. Alpha Dog, the team behind the Doom mobile game, was also shut down. The news comes 3 years after Microsoft purchased ZeniMax for $7.5 billion.

So, why would Microsoft eliminate these teams? The decision is a combination of many factors, but it mostly comes down to money. More specifically the game development budgets for new projects. Xbox wanted to re-allocate the budgets of these studios to other "high-impact" and "priority" games under the ZeniMax umbrella--your Elder Scrolls and Fallouts and Dooms, in other words. IGN recently posted the full internal memo from Xbox content and studios president Matt Booty, who describes the move as a "reprioritization of titles and resources."

Sources recently told Bloomberg's Jason Schreier that both Tango Gameworks and Arkane Austin had each pitched a new project. Rather than greenlighting the budgets for Arkane's and Tango's new games, Xbox shut the studios down, and appears to have moved those budgets and payroll to other games and divisions.

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In a meeting with Xbox employees, ZeniMax and Bethesda studios head Jill Braff indicated that the shrinkage may have also had a logistical aim.

"It's hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do. I think we were about to topple over," she said.

As for the individual performance of the studios themselves, Xbox's top brass says this decision had nothing to do with the booming success of Tango Gameworks' Hi-Fi Rush or the failure of Arkane Austin's Redfall.

According to Xbox marketing exec Aaron Greenberg, Hi-Fi Rush ticked all the right boxes and Microsoft deems it a success.

"Hi-Fi RUSH was a break out hit for us and our players in all key measurements and expectations. We couldn't be happier with what the team at Tango Gameworks delivered with this surprise release," he said in April 2023.

While that's Microsoft's public statement, the story behind the scenes could be a bit different. Likewise in April 2023, sources told Jeff Grubb that Hi-Fi Rush "didn't make the money it needed to make."

Xbox's ZeniMax division is likely spending big right now as it ramps up new AAA games, hence the apparent need to move around budgets. Bethesda Game Studios is working on The Elder Scrolls VI and new Starfield content, MachineGames is producing the Indiana Jones project, Arkane Lyon is making the anticipated Blade game, and id Software may be working on a new Doom title.