Phil Spencer on studio closures: "I have to make hard decisions" to run sustainable business and grow

After hosting a new Xbox Showcase, Phil Spencer finally addressed the recent studio closures. The Microsoft Gaming CEO detailed the decision making behind this process, also commenting on other things related to the Xbox business.

Phil Spencer on studio closures: "I have to run a sustainable business inside the company and grow"

Hi-Fi Rush (left), Phil Spencer (right)

Spencer opened about Microsoft’s decision to close first-party studios such as Tango Gameworks and Arkane Austin in a new interview with IGN. He explained that he didn’t talk publicly about this because Microsoft was focusing “on the team and the individuals,” trying to provide them with severance and other things during these difficult times.

In the end, I've said over and over, I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make. We will continue to go forward. We will continue to invest in what we're trying to go do in Xbox and build the best business we can, which ensures we can continue to do shows like the one we just did.

Phil Spencer

CEO of Microsoft Gaming

Arkane, Tango, Alpha Dog, and Roundhouse Games joined Microsoft after the $7.5 billion acquisition of ZeniMax.

The closure of these teams shocked not only gamers, but also many industry professionals. Arkane Studios founder Raphaël Colantonio, who left the company a long time ago to run his new independent team WolfEye, was caught off guard by such a sad ending for the Austin office. He said he was “naive like everybody about what Microsoft was saying.” However, he remains optimistic about the future of talent that lost their jobs: “The companies end, and the people keep making games. So that spirit will trickle down, and a few years from now, there will be more of that Looking Glass-y kind of spirit.”

Speaking to IGN, Spencer also commented on Microsoft’s multiplatform approach. The company will continue to bring its games to other platforms, following the recent ports Pentiment, Hi-Fi Rush, Sea of Thieves, and Grounded.

For example, the upcoming DOOM: The Dark Ages will arrive on PS5 on day one. And it was id Software’s decision to make the game non-exclusive to the Xbox ecosystem, with Spencer saying that “it’s a franchise that I think everyone deserves to play.”

Spencer noted that people were skeptical about certain decisions made by Microsoft Gaming over the past several years, including the launch of Game Pass. But he thinks this strategy is beneficial for the company’s long-term growth.

“Right now, we have more Xbox console users than we’ve ever had in the history of Xbox,” he said, adding that Game Pass doesn’t cannibalize traditional sales on the platform. According to Spencer, third-party game sales have grown “double digits every year over the last five years.”

Large M&A deals like ZeniMax or the $70 billion acquisition of Activision Blizzard pushes Microsoft to find customers in new places. Spencer noted that the company’s mission is to offer people a choice in how they access games, whether it is a day one purchase, Game Pass, or cloud.

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