Microsoft closes Bethesda's Arkane Austin, Alpha Dog Games, and Tango Gameworks, kills off one of its best new franchises in years in the process

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Microsoft Gaming is shutting down three Bethesda Softworks studios.

Dishonored key art 1080p
(Image credit: Bethesda Softworks)

What you need to know

  • Microsoft Gaming is shutting down three studios under ZeniMax Media. 
  • Microsoft is closing Arkane Austin, Alpha Dog Games, and Tango Gameworks.
  • Roundhouse Studios is being folded into ZeniMax Online Studios. 
  • Some members of Arkane Austin are being assigned to other studios. 

A year of devastating cuts in the gaming industry is getting even worse.

Microsoft is shuttering multiple studios under ZeniMax Media, heavily affecting the Bethesda Softworks publishing wing of the Xbox first-party group. Arkane Austin (half of Arkane Studios based out of Austin, Texas in the U.S.) is being closed, as is Japanese developer Tango Gameworks and Canadian studio Alpha Dog Games.

Roundhouse Studios is moving to become part of ZeniMax Online Studios, the team that works on The Elder Scrolls Online and is also developing a new IP. Some members of Arkane Austin are being reassigned to other ZeniMax studios, though it's not clear which studios or how many staff are being relocated at this time.

You can read the full email from Microsoft Gaming president of Game Content and Studios Matt Booty below, which was passed to Windows Central by an anonymous source:

Today I’m sharing changes we are making to our Bethesda and ZeniMax teams. These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades. 

 To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.

 

Here are the changes going into effect: 

 Arkane Austin – This studio will close with some members of the team joining other studios to work on projects across Bethesda. Arkane Austin has a history of making impactful and innovative games and it is a pedigree that everyone should be proud of. Redfall’s previous update will be its last as we end all development on the game. The game and its servers will remain online for players to enjoy and we will provide make-good offers to players who purchased the Hero DLC. 

Alpha Dog Studios – This studio will also close. We appreciate the team’s creativity in bringing Doom to new players. Mighty Doom will be sunset on August 7 and we will be turning off the ability for players to make any purchases in the game.

Tango Gameworks – Tango Gameworks will also close. We are thankful for their contributions to Bethesda and players around the world. Hi-Fi Rush will continue to be available to players on the platforms it is today.

Roundhouse Games – The team at Roundhouse Games will be joining ZeniMax Online Studios (ZOS). Roundhouse has played a key role in many of our recent game launches and bringing them into ZOS to work on The Elder Scrolls Online will mean we can do even more to grow the world that millions of players call home.

With this consolidation of our Bethesda studio teams, so that we can invest more deeply in our portfolio of games and new IP, a small number of roles across select Bethesda publishing and corporate teams will also be eliminated. 

Those whose roles will be impacted will be notified today, and we ask that you please treat your departing colleagues with respect and compassion. We will provide our full support to those who are impacted in today’s notifications and through their transitions, including severance benefits informed by local laws.

 These changes are not a reflection of the creativity and skill of the talented individuals at these teams or the risks they took to try new things. I acknowledge that these changes are also disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market. We are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games. 

 Bethesda remains one of the key pillars of Xbox with a strong portfolio of amazing games and thriving communities. As we look to the future, there is an impressive line-up of games on the horizon. In 2024 alone we have Starfield Shattered Space, Fallout 76 Skyline Valley, Indiana Jones and The Great Circle, and The Elder Scrolls Online’s Golden Road. As we align our plans and resources to best set ourselves up for success in this complex and changing industry, our teams across Arkane Lyon, Bethesda Game Studios, id Software, MachineGames, ZeniMax Online Studios and the Bethesda publishing and corporate teams will be well-positioned to build new IP, [sic] explore new game concepts.

A history of gaming culture being obliterated

Hi-Fi Rush from Tango Gameworks was announced and shadow-dropped in 2023 to wide acclaim. (Image credit: Bethesda Softworks)

Arkane Austin was one of many teams at Bethesda Softworks, being acquired alongside Arkane Lyon back in 2010. The studio helped co-develop the original Dishonored, which was critically acclaimed and both halves of Arkane Studios have helped carry on the legacy of immersive sims that is rare in big-budget gaming. Arkane Austin then went on to release Prey in 2017, as well as Redfall in 2023.

Tango Gameworks was founded in 2010, and the studio developed The Evil Within and The Evil Within 2. In 2023, the team released Hi-Fi Rush to critical acclaim, with the game receiving honors at the Game Awards and the BAFTAs.

Alpha Dog Games was acquired by ZeniMax Media in 2019. The team launched a mobile title, Mighty Doom, in 2023. 

Second wave of layoffs at Microsoft Gaming

This comes as the second big wave of layoffs at Microsoft Gaming in under a few months. Earlier in the year, 1900 people were let go across Activision Blizzard, Xbox Game Studios, and ZeniMax Media. The vast majority of the employees who were let go were from the Activision Blizzard wing. 

This is compounded by thousands of others who have been laid off in the past few months, including several hundred at Riot Games, over 500 at Take-Two Interactive, and 900 employees at Sony-owned PlayStation.

Analysis: A really bad move

There aren't words to describe how idiotic, short-sighted, and downright grim this move is, but I'll try. 

Closing these teams signifies a death of creativity. It comes at a time when Microsoft has control of massive, major gaming franchises that are doing well. Fallout has seen a huge resurgence on the back of the Prime TV series, so why is ZeniMax seeing layoffs?

If any Xbox/ZeniMax employees would like to chat, I can be reached at the Signal number in my Twitter bio. 

Samuel Tolbert
Samuel Tolbert
Freelance Writer

Samuel Tolbert is a freelance writer covering gaming news, previews, reviews, interviews and different aspects of the gaming industry, specifically focusing on Xbox and PC gaming on Windows Central. You can find him on Twitter @SamuelTolbert.

8 Comments Comment from the forums
  • TBBudak
    Perhaps this shall help the strays in the Xbox community see clearly about the true intent of Microsoft.

    MS is not your friend. Neither is Xbox. MS bought these companies for their best selling IPs. I also hope people understand that GamePass lead to the demise of Xbox. These games flopping, these studios closing, are the consequences for having a community that doesn't buy videogames, rather rent them.

    This is why Xbox is flocking to PS.
    Reply
  • Cassius Clae
    We all wanted new fallout games, sounds like Bethesda is consolidating to focus on the bigger, more impactful franchises faster. Sorry for any devs and their family's that are impacted but this. Entertainment is a volitile business for sure.
    Reply
  • TBBudak
    Cassius Clae said:
    We all wanted new fallout games, sounds like Bethesda is consolidating to focus on the bigger, more impactful franchises faster. Sorry for any devs and their family's that are impacted but this. Entertainment is a volitile business for sure.
    I understand where you're coming from, but i don't think this is the case. If they wanted to focus on their biggest IPs, guess what... Arkane could've aided them, they could've this is simply about MS not wanting these lesser studios. Bethesda has always released games outside of their major ones, but under MS it seems we'll only get the big ones.
    Reply
  • Cassius Clae
    TBBudak said:
    I understand where you're coming from, but i don't think this is the case. If they wanted to focus on their biggest IPs, guess what... Arkane could've aided them, they could've this is simply about MS not wanting these lesser studios. Bethesda has always released games outside of their major ones, but under MS it seems we'll only get the big ones.
    I understand where you're coming from as well as everyone else that is upset, but I just don't think we have realistic expectations as fans in this industry. They spent $100 billion on studio investments, people want no studio to ever close, TES5 now, fallout 5 now, and it has to be bug free and have years of content day one at 4k60.
    Reply
  • Zachary Boddy
    It's a dire day for Xbox players, but even more so for the affected developers. The video games industry is not in a healthy state right now.
    Reply
  • Luuthian
    Literally two weeks ago or so Todd was saying they were looking for ways to increase output. If that was true they would have absorbed these people, not laid them off. This is more likely some kind of short sighted financial tax gamble or write off. Like Zach said above, things are not healthy. And you can't trust the words of the people steering the ship. Not a good sign.
    Reply
  • fjtorres5591
    Zachary Boddy said:
    It's a dire day for Xbox players, but even more so for the affected developers. The video games industry is not in a healthy state right now.
    Correct.
    It is tragic for the people impacted who have some excellent games in their resumes and it is appropriate to be upset for them and us, for the followups we won't get.

    Human tragedy aside, this was only to be expected.
    The video game industry *is" in bad shape.
    But those blaming gamepass or corprate greed or eeevile Microsoft are missing the forrest for the trees.

    One more time: the entire industry is in trouble.
    It's not just Embracer, or whatever they call themselves this week.
    It's not just Ubisoft or Sony or EA.
    Square practically gave away their western studios, WB is in chaos, smaller studios are downsizing or outright closing.

    And yes, it is Microsoft too.

    Three things to consider about the XBOX business:

    First, game pass isn't the cause of their problems. Rather it minimizes their problem. Their subscriber base isn't growing as fast as they hoped but it isn't shrinking. As bad as things might get, that $4B a year isn't going away. Add in King and COD and that is some 80-90% of last quarters net. And more than most competitors. XBOX is not going away no matter what the ill-wishers might dream of. Not the ecosystem and not the hardware (before 2030).

    Second, Microsoft is a consortium and each unit is supposed to be individually profitable. Just because Azure brings in tens of billions in profit (thank Ray Ozzie) doesn't mean the other units don't have to pull their weight. This also applies to the pieces within XBOX; Activision, Blizzard, King, Bethesda, Rare, Obsidian, etc. Yes, MS gives them plenty of autonomy and support but sooner or later they need to deliver more than good reviews. MS is still a for profit operation and the same is expected of its pieces. And, see above, the gaming world is in trouble heading into "more* trouble. Anybody who thinks this is bad wait a bit: MS tends to be proactive. If they are still battening the hatches, the storm they see is worse.

    Third: from the moment MS bought ABK (a bargain deal in the long term but a short term cost center, as we just saw) and tallied up 42 named studios (and what, 60 development teams?) the one question few have asked is how are they going to schedule all the output of tbose teams? At a time when even second tier games are taking five years and $100M each, the global economy is headed into a big " contraction" to put it mildly, and the market is stagnant,how is MS going to profitably schedule 60 games over the next five to six years? One a month? The stated goal is one big game per quarter. That's 24. On top of the live service games. Even if COD stays on a yearly cadence, that leaves 18 big projects to launch. Anybody care to list them?

    Something had to give.
    Over at Blizzard it was the "Odyssey" team that had spent 5 years on a project and needed to start over. Not their fault but a relatively obvious place to cut back.

    Arkane Austin? One of the reasons given for the REDFALL issues was that a lot of the top contributors to PREY and DISHONORED were no longer there. The name and rep remained but the output? For the past year they've been repaing REDFALL and next...?

    Looking at the list of studios under XBOX, BETHESDA, and ABK, what are they each working on? Which projects are too promising/advanced to kill? Which are at risk?

    The word that comes to mind is "triage".

    And not just at XBOX.

    The human drama is awful but there is more going on than the press releases and tweets but those in the know aren't likely to dish. All we can do is speculate.

    In that vein, the one studio that shocked me is Tango.
    MS wants to boost their XBOX presence in Japan and cut Tango?
    Definitely there must be something going on.
    Reply
  • naddy69
    "Second, Microsoft is a consortium and each unit is supposed to be individually profitable. Just because Azure brings in tens of billions in profit (thank Ray Ozzie) doesn't mean the other units don't have to pull their weight. "

    This is why things like Windows phones and MS music streaming (whatever it was called) and Band and Surface Duo and on and on, are now gone. Divisions HAVE to be profitable. If not, then products get killed.
    Reply