#385: Fallout

May 8, 2024:

And if, as seems abundantly clear, further cutbacks are on the horizon, do the decent thing and let those teams go. Offer them their independence and their IP for pennies on the dollar. Let them keep their talented teams together and head out for different pastures that, while certainly threatening right now, are a good deal greener and less terrifying than the one they’re in today. [...] This is cultural vandalism with a dreadful human cost, and I am absolutely fucking sick of it.

At least they did that, I guess. “Sick of it”, though? Sheesh. Back then it was all sunshine and rainbows compared to where we are today.

So, in case you somehow missed it: even more Xbox layoffs. A total of 3,200 jobs, 20% of the division’s headcount, are being sent to the Recycle Bin; half of them had been sent packing by the time Asha Sharma had clicked Send on her latest Fun And Motivating Memo, and the remainder will follow over the next 12 months. Double Fine and Compulsion are returning to independence, retaining their IP and with a little runway to ease the transition. Ninja Theory and Undead Labs have been sold off, and Arkane Lyon has entered consultation over its future that will likely end up in independence or a sale once France’s stringent employment laws have been navigated. “These changes,” Sharma honked, “are about a bigger future for Xbox, not a smaller one.” You sure about that, old fruit? Doesn’t look like it from here.

I have taken great heart in seeing, over the course of this week, so many mainstream outlets echoing what Hit Points has been saying for years. I say this not because I think it makes me look good, like I am some sort of trend-setter, though admittedly if you were to say that I’d struggle to disagree because in my advancing years I am getting better at taking compliments, and have grown rather fond of them. It’s been easy for me to say, repeatedly over Hit Points’ five-year existence, that Game Pass wasn’t working, that Xbox was doomed, that its leadership was either clueless or evil and likely both at once, and all that. I am after all just one guy, wittering away at his modestly sized audience in an entirely independent operation. I have no industry relationships to maintain; I do not live or die on the good graces of platform holders, publishers or grudge-prone PRs. For the likes of Gamespot and Game Informer, among others, to break cover, consequences for future coverage opportunities and ad partnerships etc be damned, and call out this new-look Xbox leadership for the craven clown show it is really makes plain just how fucking bad things have got.

I’ve been putting off writing this newsletter all week, even though I know from experience that The Numbers do well when I am quick off the blocks, reaching people while they are all afroth with the fury of it all. So why wait? These things are such a downer to write, for one thing. For another, seeing so many other outlets step up and speak out meant I felt my take could wait a bit. But more than anything I knew that, while there was plenty to be miserable and furious about in Sharma’s announcement memo, worse was surely in the post. For all that she has sought to position herself as a clean break from the Phil Spencer era, Sharma shares with her predecessor an obsession with image control. Unlikely as it might have seemed while reading the memo, I knew she would only cherry-pick the best bits. The real tea, I was sure, was yet to spill.

And, in the days since Sharma’s announcement, it really, really has. Obsidian has lost a quarter of its staff, had multiple projects including a planned Avowed sequel cancelled, and been put to work on a new Fallout game. Despite shipping three Doom games, plus expansions, in the last decade — a rate of productivity few studios on the planet, let alone within Microsoft’s portfolio, can match — Id Software has been cut to the bone. Its tech team, one of the best in the business for over 30 years, has seemingly been entirely dismantled. Over 200 roles have been eliminated at ZeniMax Online, maker of The Elder Scrolls Online. There have even been cuts at the team that is apparently making The Elder Scrolls VI, first announced at E3 1922 (subs please check). While I haven’t seen it reported anywhere, I've heard from multiple people that Xbox’s hardware and Advanced Technology departments have also been hollowed out, despite Sharma and company’s commitment to a next-gen console. As this round-up makes clear, just about every corner of the Xbox division has been kicked, very hard, in the face and nuts.

So, yep, glad I waited. That original memo was designed, first and foremost, to make Sharma seem like a good person — one willing to let unwanted studios go for a song, rather than shuttering them like Spencer would have — and who has an actual, like, plan, man. Perhaps inevitably given the scale and sums of that fateful $68.7bn acquisition, said plan leaves Xbox looking a lot like Activision used to. Back in the early 2010s, then-CEO Eric Hirshberg felt the publishing division was spread too thinly, trying to justify its size by offering something to everyone. “In the entertainment business the instinct is generally to spread the chips around the table and hope one of them is Lady Gaga or hope one of them is Avatar,” he told Fast Company in 2012. “I think people take a false security in a wide slate.”

Sounds reasonable enough, doesn’t it. And sure, in a purely look-at-the-numbers sense, Hirshberg’s decision to shutter studios like Bizarre Creations, and leave an absolute treasure trove of classic IP to rot, in favour of a handful of blockbuster brands — Call Of Duty, World Of Warcraft, Destiny and, stop laughing at the back, Skylanders — absolutely worked: it made a lot of people a lot of money, and led directly to the biggest acquisition in game-industry history.

Read just the memo, ignoring the wider reporting it has spawned about the extent of the layoffs, and you'd be forgiven for thinking that Sharma is doing the same with Xbox, dispensing with the makers of stuff like Keeper and Hellblade because, whatever their talents, they aren’t about to bring home the sort of bacon Sharma and co will need if they are to save their organisation from the slaughterhouse. Focus in on the big-name moneymakers: The Elder Scrolls, Fallout, Halo and so on. Throw the money you used to spend on artsy Game Pass awards bait at games you reckon will sell in the tens of millions. Hell, that’s almost a strategy. Throw in a few paragraphs of MBA Shibboleth-y stuff about eliminating layers of management — apparently in some corners of the Xbox division, decisions require 14 stages of approval; Sharma commits in her memo to limiting that to five, and ideally to three — and it almost seems like she's getting somewhere. Nowhere good, obviously. But somewhere.

(I’ve seen some doubt cast on that 14-approvals claim, by the way, and I agree it sounds a bit outlandish. But it did once take almost a full four-week production cycle for Microsoft to clear a handful of assets for us to use in a Forza feature in Edge, so it sounds plausible enough to me.)

Whatever the numbers, getting rid of excess management is a perfectly valid strategy — providing, of course, that you are doing it in service of your core product, of the thing that actually makes you money. In the case of Xbox it would be a reasonable approach if the ultimate goal was making developers’ lives easier. If technical and creative teams are twiddling their thumbs for days on end, waiting for decisions to filter down from on high, they’re obviously not going to get games out the door on time. Slash those approval times by two-thirds and you’ll make games, and money, much more quickly, and hasten your journey to the billion daily users that Sharma thinks Xbox will somehow one day attract.

All of that goes out the window, of course, when you’re selling off, letting go, and gutting your development teams every summer. At that point you’re just smashing shit up because you think it makes you look good, and brave, and strategic. Needless to say, it does none of those things.

What, then, are we to make of all this, beyond the rather self-evident fact that this bunch of sorry clowns are every bit as useless as their predecessors, and are if anything even worse? I genuinely do not get it. After this week’s misery we are left with a company going full steam ahead on a new console despite the fact that no one is asking for or can afford it, and there is no hardware team to actually make it. That plans to back it all up with a line-up of megabudget games that cost the earth and take an age to make, and will take even longer now that the bosses have sacked off so much talent, experience and institutional knowledge. That has effectively told its remaining staff that the beatings will continue until morale improves — which, as the boss has recently made clear, will only be when a billion people play Xbox games every single day. Just do Roblox seven times over, gang, and all of this will be over. What a dreadful, despicable mess, and what an awful, evil, deeply unserious company. Fuck off out of my sight.