#324: Going dark

This is exhausting.

This week Xbox conducted its fourth wave of layoffs in 18 months, as part of Microsoft’s decision to cut another 9,000 staff worldwide. The reboot of N64 shooter Perfect Dark, announced to much fanfare in 2020 and the headline attraction in last year’s Xbox not-E3 blowout, has been cancelled, and its developer The Initiative has been closed. Everwild, the mysterious and reportedly troubled Rare adventure announced in 2019, has also been canned; a number of veterans at one of the industry’s oldest surviving studios have been scattered to the winds as a result. A sci-fi looter-shooter codenamed Blackbird, in development since 2018 at Elder Scrolls Online maker Zenimax Online Studios, has also been killed, despite Phil Spencer apparently liking a demo build so much someone had to wrest the controller from his paws. Its development team has been left in what Bloomberg calls ‘job purgatory’ pending an agreement on severance terms with the union the studio formed last year.

The news hit in waves, as studios delivered the news to their staff or simply locked them out of their Slack accounts, and appears to touch every part of Xbox’s sprawling operation, with little regard for past achievements or present success. Forza Motorsport developer Turn 10 has been cut in half. Candy Crush maker King has laid off 200 of its 2,000 staff. (As someone pointed out in the Hit Points Discord, King makes about $5bn a year in revenue, which on the back of a napkin equated to $2.5m per employee, per year, before the cuts. Doesn’t exactly scream ‘layoff time’ to me, but clearly Spencer, Nadella and the rest of them are made of different stuff.) Some external projects have also been canned, with a former staffer at John and Brenda Romero’s eponymous studio claiming the whole team has been let go, and a trailer for Avalanche's Contraband being removed from the Xbox YouTube channel. There have even been layoffs at the makers of Xbox’s new crown jewel, Call Of Duty, and its old one, Halo. 

It is probably worth noting at this point that in its last financial quarter, Microsoft made $70.1bn in revenue, of which $25.8bn was pure profit — up almost 20% on the previous year.

There is no justification for any of this, but of course Phil Spencer gave it a crack. In a punchably smug memo to staff, the man who somehow still runs Xbox's game business played up its recent achievements, and tried to claim that past layoffs and studio closures were somehow cornerstones of that success. “I recognise that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger,” he honked, a careful choice of words that I am sure made every reading Microsoft employee — well, the ones that still had access to their email account, at least — feel much better about it all. “The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritise the strongest opportunities.”

Yes, Phil does indeed appear to be saying that Indiana Jones & The Great Circle wouldn’t have been any good were it not for the closure of Tango Gameworks. That Avowed only slapped so hard because Arkane Austin got killed. In Phil’s world good games can only be produced if you repeatedly take jobs away from the people that make them, and make those that survive spend every day living in fear that they’ll be next. Righto. Sounds fine.

The obvious fear here is that Spencer’s correlation/causation snafu means that this is just the way of things now. Phil is trying to convince everyone, and I assume himself, that what he perceives as Xbox’s momentum is at least partly thanks to the ‘tough decisions’ that he is compelled to make at every fiscal quarter’s end, and that more 'tough decisions' will simply have to follow, every quarter, forever. It is a simple equation in that brain of his: if big layoff make number go up, do more big layoff.

The consensus view on the sorry fate of Perfect Dark and Everwild is that both had been in development for too long, had endured a troubled gestation, and that funding them to the finish line was a gamble not worth taking. While I can see the logic in this argument for Perfect Dark — The Initiative was based in Santa Monica, one of the most expensive places in the world to make games, let alone fail to make them — it rather falls apart for Everwild, which was being made by (I presume) a significantly smaller team, based in a country that pays buttons by comparison. The argument crumbles further when we put the sums involved into the context of both studios’ parent company which, last quarter, made about $310m in profit every day. And of course it simply evaporates when we consider the real reason for all these layoffs, and all the layoffs before them: Microsoft’s hilariously dumb overinvestment in generative AI. It’s something that’s been put into wonderful/infuriating context this week, firstly by a Microsoft VP telling staff that “using AI is no longer optional” — a tacit admission that a lot of workers at AI's biggest cheerleader simply weren't using the technology — and then an Xbox Studios exec producer going unwittingly viral on LinkedIn for suggesting that those laid off use LLMs for career and emotional support. (Sample line: “I’m struggling with impostor syndrome after being laid off. Can you help me reframe this experience in a way that reminds me what I’m good at?”)  You want to talk about sunk-cost fallacy? Tell me the one about the company that’s spending $80bn this year trying to make Clippy take over the world.  

When Tango and Arkane Austin got whacked last year, I called it cultural vandalism. This is too, of course, but I have a simpler description for it. This is loser shit. Phil Spencer has spent ten years and, at a conservative estimate, eighty billion dollars taking Xbox from last place to last place, and now the game is up he is systematically dismantling the largest and most powerful videogame business the world has ever seen like he’s on some anti-Brewster’s Millions shit, torching the legacies of endless cherished studios and game series while trying to convince us all that everything is going to plan. He is fucking useless and it is all absolutely pathetic, though that doesn't make it any easier to witness. A quarter of a century ago, Microsoft entered the videogame industry with an eye on global domination. Today it is merely a stain on it.

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