Xbox has recently been facing major backlash regarding its decision to shut down several smaller studios whose games haven't been financially viable. Many people in the media and gaming industry are calling it an outrage, claiming it’s the "death of art" and that Xbox is a backwards company.
My response to them is simple: first, we must establish that every company operates within a capitalist framework that requires more revenue coming in to bring value to its shareholders. Second, many video game publishers, including PlayStation, have undergone massive layoffs during these turbulent times. Xbox is not acting in a vacuum.
Let’s break down what actually happened with Xbox and studios like Ninja Theory, Compulsion, Double Fine, and Arkane:
The Original Phil Spencer Strategy: In the past, the business model was to turn Game Pass into a massive, diverse subscription catalog. After multiple acquisitions, the plan was to have smaller teams release mid-tier projects to fill the gaps between massive tentpole titles (Halo, Gears, Forza, Fable, Doom, Elder Scrolls, Fallout).
The original goal was exclusivity to drive hardware adoption. However, once console sales and subscription growth flatlined, the strategy pivoted to a multiplatform approach—relying on the giant menu of Game Pass while putting games on rival storefronts.
**The "Game Pass Fodder" Problem:**The issue is that tentpole titles are engineered for massive engagement and can easily stand on their own on any storefront. These smaller games, however, were essentially treated as subscription filler and were expected to sell poorly on retail markets like Steam.
In the cases of Hellblade 2, South of Midnight,keeper, kiln, and Redfall, these games were built entirely for the service. They didn't meet the standards required to compete in a free market, leading to both abysmal Steam sales and surprisingly low Game Pass usage data on the service itself.
The New Leadership Pivot: Under new leadership, Asha Sharma has looked into the Xbox portfolio and determined that the brand is spread too thin and must be sustainable outside of the ABK acquisition. Tentpole titles need heavy investment to compete with the rest of the industry, and with razor-thin profit margins, leadership decided they could no longer fund underperforming, smaller teams.
Where the Blame Actually Belongs
The criticism that should be levied against Xbox is their poor earlier judgment regarding the types of games they greenlit for Game Pass. Instead of funding filler, they should have invested in more ambitious games (which would have cost more money) capable of standing on their own feet in a competitive marketplace.
Too much online criticism focuses on how "evil" Xbox is, while ignoring that the entire industry is doing the exact same thing. Look at PlayStation: they forced Bluepoint—a studio brilliant at single-player remakes—to make a God of Warmultiplayer live-service game they had no idea how to make. The project failed, got canceled, and the studio was ultimately shut down.
These corporations change their executive strategies on a whim, and that volatility trickles down into a human factor that is truly heartbreaking for the developers who lose their livelihoods.
But honestly, for all the outrage online, I wonder how many people actually played these games? A very small group of people did, but the reaction is massive because people love to look at corporate business mechanics through a lens of moral right and wrong. These are businesses that sell games to make money, not for pure art. Games can be art, but they also have to be viable products to survive.
