Recent reports indicate that Microsoft’s Xbox division is preparing to undergo major layoffs shortly after the company ends its fiscal year on June 30th. While one of these reports had also indicated that we might be looking at some studios being closed down as a result, a new report by French journalist Sylvain Trinel indicates that things might be a lot grimmer for the industry at large than we might have initially thought.
In a series of social media posts, Trinel has described the coming layoffs as “just the beginning of a massive bloodbath” for studios owned by publishers.
Along with game development companies under Microsoft, like id Software and Bethesda, Trinel has also pointed to other major developers, like DON’T NOD and Quantic Dream. He said that there are “a lot of layoffs expected in many very well-known studios. It’s going to be a catastrophe.”
Along with these companies, Trinel has also indicated that BioWare might be in trouble as well, which is likely, considering Electronic Arts’ current need to make more revenue thanks to its structured buyout.
“The echoes I’ve been able to pick up tonight are far from encouraging,” wrote Trinel. “This is really just the beginning.”
The Xbox division is noted as being under some heavy scrutiny under the leadership of its new CEO, Asha Sharma, who had spoken about the company ending the fiscal year with an accountability margin of 3 percent lower than the previous year. As part of this, a report has indicated that there will be plenty of other budget cuts throughout Xbox as well, including spending in marketing and “some other areas of the business.”
“We will end this fiscal year at about a 3 percent accountability margin, down year-over-year,” wrote Sharma and Xbox CCO Matt Booty in a recent blog post. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
As for BioWare owner EA, the company is currently in the process of being sold to an investor consortium made up of Saudi Arabia’s Public Investment Fund, Affinity Partners, and Sliver Lake Partners. The deal, valued at around $55 billion, was approved by EA’s shareholders back in December. The next step in the acquisition process is for the company to get approval from government regulators.
BioWare developers had reportedly started becoming concerned about this acquisition quickly after the deal was first announced. Speaking to various outlets, developers had already spoken about being prepared for the worst, with many of them noting that they were making sure that their portfolios were up to date.
“I’ve been doing it since last year, but I’m making sure I have a portfolio ready and feelers out for other jobs,” said a developer. “Kind of feels like a matter of time.”
Others had spoken about continuing to work until the studio is explicitly told to stop. “We’re going to keep working until they tell us we’re done,” they said. “It’s not the healthiest way to live, but as long as the paychecks keep coming, we’re not going to just walk away.”
