Yesterday, ShackNews broke the story that Microsoft had just issued layoffs to all employees that were non-essential to the shipping of the Xbox 360 exclusive title, Halo Wars. This story was later refuted by sources at Kotaku. Their sources stated that while there were no layoffs issued today, Shane Kim, the former head of Microsoft Game Studios had made a trip down to Dallas, Texas. It was alleged that the reason for the trip was to deliver the news that the studio will be closed sometime during the coming year, shortly after the release of Halo Wars. This has since been confirmed by Gamespot, via an official Microsoft press release.
So why would Microsoft shutter a studio that had been open for over fifteen years and had shipped almost twenty million units? This looks like it could be signaling the end of the PC game era at Microsoft. Ironically, Microsoft would be abandoning one of the few areas where they had developed consistent success over the last decade. While Microsoft has confirmed that the studio's closure is "fiscally rooted," this may be an effort to shore up support for their budding Xbox business.
Lets look at the facts. In the last twelve months, Microsoft has been significantly trimming the proverbial tree within Microsoft Game Studios. The carnage started last year, on the heals of the failed cross-platform game Shadowrun. Shortly after launch, the boys in Redmond pulled the plug on FASA Studio. This decision essentially put all first party support of cross-platform gaming out to pasture.
The next studio to see the writing on the wall was Bizarre Creations. In a scenario similar to that of Ensemble and FASA, they bailed out after shipping a rather lackluster installment to the Project Gotham Racing franchise. On September 26th of 2007, it was announced that they would be dissolving associations with Microsoft Game Studios. The very same day, Activision announced that they had acquired the troubled developer.
Finally, in the most notable retreat, on October 5th, 2007, Bungie Studios jumped ship. As was the trend with the other two defunct studios, Bungie announced their defection a meager six days after shipping Halo 3. While they would have no trouble supporting themselves as an independent studio, FASA and Bizarre didn't have luxury of Bungie's cashflow.
Now, lets look back on Microsoft's most notable Intellectual Properties of the last five years. Gears of War was made by Epic Games, a third party developer. The Halo franchise looks to be getting farmed out to several different developers including Ensemble, Bungie, and potentially Gearbox. The only real franchise that stays with within Microsoft Game Studios is Fable, which will continue to be developed by Lionhead Studios.
So what do all of these games have in common? They had lackluster sales for their PC installments. This is where my hypothesis comes into play. Microsoft, seeing the industry's failure to accept the Games for Windows initiative, and the rampant spread of piracy, might just abandon the PC game business all together. A move like this would free up a considerable amount of funds for Microsoft. That money could sunk into securing more third party exclusives for the Xbox 360 and developing new Intellectual Properties for their meager remaining studios.
As an interesting twist, while Ensemble Studios will be officially dissolved after completing Halo Wars, it seems that the leaders of the studio will be establishing another independent company. This yet unnamed studio, has been already locked in to support Halo Wars after launch and may develop games for Microsoft as a 3rd party developer. It seems that this conspiracy theory may have some legs. It will be interesting to see how this story develops.
Lets just hope that Microsoft doesn't forget that the PC is what put them on the map...
To read ShackNews' article breaking the story, click HERE.
To read Kotaku's article clarifying the rumors, click HERE.
To read Gamespot's official confirmation, click HERE.
To read Microsofts official press release, click HERE.