Following Microsoft’s closure of multiple Bethesda studios, including Arkane Austin and Tango Gameworks, former senior public relations lead Brad Hilderbrand took to LinkedIn to explain why the decision was likely made.
Hilderbrand said there were two main factors for the closures: stagnating growth for Game Pass and the $69 billion deal to acquire Activision Blizzard. He said that games that debut on Game Pass often underperform.
“The biggest paradox with Game Pass is that basically every game that launches on the service badly misses its sales goals,” Hilderbrand wrote. “Makes sense though, why pay full price to buy a game when you can play it for “free” as part of your subscription?”
He said that growth for Game Pass has stagnated, and the amount of revenue it brings in does not match the budget required to make the games on the service. This is especially true for games like Tango’s Hi-Fi Rush and Arkane’s Redfall, which do not stay on the top Game Pass charts for long enough to bring in significant revenue.
“Games like Hi-Fi Rush, which is incredible mind you, gets a very small bump in revenue from being the hot Game Pass game for a month, then it falls off a cliff when everyone moves onto the next thing,” Hildebrand wrote. “Poor Redfall had it even worse since it launched so rough, it never had a chance.”
Hildebrand said the expensive purchase of Activision has turned Microsoft’s attention towards Xbox to make back the deficit, putting more pressure on Game Pass.
“All that wouldn’t have mattered even 3 or 4 years ago because back then Xbox was basically a rounding error on Microsoft’s books,” he wrote. “Then Xbox went on a buying spree and spent a lot of money on Bethesda, but orders of magnitude more on Activision. Now, the Eye of Sauron has turned, and Xbox is expected to start making that $70B back, or at least cut expenses to the bone (and then some) while they try.”
He said that recent efforts to spur Game Pass growth have failed, with little on the docket that is likely to change that. Call of Duty may have a chance, but putting it on Game Pass could potentially reduce sales.
“All those smaller studios making really interesting games are going to fall away,” Hildebrand wrote, “simply because as good as games like Hi-Fi Rush are, they’re never going to make enough money to make up that $70B hole that Xbox now has to dig itself out of.”