Microsoft's mystifying mismanagement | This Week in Business

10.05.2024 - 15:27 / gamesindustry.biz / Arkane Austin / Tango Gameworks

This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

The big news this week was Microsoft taking an axe to the ZeniMax studio system, shutting down Hi-Fi Rush developer Tango Gameworks, Redfall studio Arkane Austin, and Mighty Doom maker Alpha Dog Studios. Roundhouse Studios will also cease to exist, with Microsoft saying the team will join ZeniMax Online Studios.

People often associate layoffs with a struggling company that must get rid of people because it doesn't have the money to pay them anymore. That is absolutely not the case here. This is at least the fourth round of layoffs at Microsoft in the past year-and-a-half, a span which has been the most profitable stretch in the company's history.

STAT | $20.2 billion – The average of Microsoft's reported quarterly profits since Q2 FY23 (the three months ended December 31, 2023), when it laid off less than 1,000 people. That was followed in January of 2023 by layoffs for 10,000, cuts of an additional 1,900 game division employees in January of 2024, and this week's closures and cuts.

STAT | $15.8 billion – The average of Microsoft's reported quarterly profits for the 11 quarters before that, the period stretching back to the beginning of the pandemic, which was already a boom time for the company.

Wow, Microsoft sure does make a lot of money. Fortunately, the company is re-investing all that money into its operations to improve the business further, right?

STAT | $8.4 billion – Microsoft returned $8.4 billion to shareholders in the form of share repurchases and dividends in its most recently completed quarter. Because why would you want to invest in things or keep successful and productive studios around when you can essentially burn that money to goose the share price a bit?

But that's Microsoft as a whole, and the Xbox doesn't seem to be going quite as well. It doesn't seem to have meaningfully changed its market share, and things are tough all over for the industry. At least that's what everyone tell us, with years of eager investment and across-the-board growth replaced not by an industry-wide crash but expectations of mild near-term declines and more modest growth for the foreseeable future.

QUOTE | "The thing that has me most concerned for the industry is the lack of growth. And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth – because why else does somebody own a share of someone's stock if it's