Former Xbox senior PR manager, Brad Hilderbrand, departed from the company in May 2024, just before the controversy surrounding the closure of Arkane Austin and Tango Gameworks erupted. Through his social media, he shared insights into Microsoft’s decision to shut down these studios, which were considered promising.
Hilderbrand highlighted two key reasons for this move, both unrelated to the Bethesda acquisition. Here’s a summary of his thoughts.
The primary reason is Game Pass
- Games released on Game Pass tend to underperform in sales, despite being available through the subscription service. While this is expected, the lack of significant growth in Game Pass popularity fails to compensate for the drop in direct sales revenue.
- For instance, titles like Hi-Fi Rush see a brief surge in subscription revenue upon release but quickly lose traction as users move on to other games.
- With Game Pass growth slowing down, subscription earnings are unable to match production costs, leading to financial challenges.
In his comments, Hilderbrand suggested that Xbox’s console performance has hindered Game Pass adoption, as the platform struggles to attract a substantial user base.
The second reason is Activision Blizzard
- A few years ago, Xbox’s division at Microsoft operated within manageable expenses. However, major acquisitions like Bethesda and, more significantly, Activision Blizzard, increased financial pressure on Xbox.
- Following these acquisitions, Xbox’s financial performance came under scrutiny, with expectations for returns on the substantial investments made in Activision Blizzard.
- Hilderbrand emphasized the need for these investments to yield results or reduce costs to address the financial implications.
Hilderbrand noted that the focus on major franchises like Redfall and Starfield within Game Pass has not translated into significant subscription growth. Without upcoming high-profile releases to drive momentum, smaller studios with innovative games face challenges.
The dilemma with Call of Duty exemplifies this issue. Releasing the game on Game Pass risks revenue loss, while withholding it may disappoint subscribers expecting it as part of their subscription. This predicament reflects the broader impact on smaller studios amidst Xbox’s financial pressures.
Brad Hilderbrand
Article from stopgame.ru