On May 7, Microsoft closed down four first-party development studios it had acquired from Zenimax Media in 2021 including Tango Gameworks, developer of The Evil Within series and 2023’s surprise hit Hi-Fi Rush. It’s the latest round of layoffs and closures that the gaming industry, and Xbox specifically, has seen in recent months. But with the Xbox portfolio seemingly growing bigger with acquisitions only for Microsoft to then lay off the developers doing the most interesting work, it raises questions about the actual value of the company’s Game Pass subscription service. After all, that service seemed great, in no small part, precisely because it gave subscribers access to the games made by the very developers that have now been shuttered.
First launched in 2017, Game Pass is a games subscription service that has long been heralded (in a complimentary way) as the Netflix of games. Subscribers would get access to a wealth of new and old titles including Microsoft exclusives, big AAA tentpoles from third-party publishers, and indie darlings. But since the launch of the Xbox Series consoles in late 2020, the company has often received criticism for a lack of big, exciting exclusives. And while that turned some people off of Game Pass, it helped the service find its stride in its ability to support interesting, but more unconventional, ideas from some of Xbox’s first-party studios.
Xbox has been one of the companies leading the charge in the industry’s current acquisition trend. In addition to Bethesda’s parent company ZeniMax, Microsoft has also acquired major companies like Activision Blizzard as well as smaller independent development studios including Tim Schafer’s Double Fine and Hellblade developer Ninja Theory, among others. The assumed benefit of acquisition for these publishers and studios was the safety of being owned by one of the industry’s biggest companies. For studios like Tango Gameworks and Obsidian Entertainment, that assumed safety let developers take unique risks they might not have had the chance to otherwise.
Case in point: While many gamers are still waiting on the next Gears or Fable game, Xbox quietly put out two of the most exceptional exclusives in recent memory in the past two years. The first was 2022’s Pentiment, a murder mystery adventure game set in 16th-century Bavaria developed by Obsidian. It’s a title that director Josh Sawyer had been wanting to make for decades. Similarly, Tango Gameworks developed and surprise-dropped the rhythm action title Hi-Fi Rush in 2023, giving the studio a chance to break away from its horror roots. Both teams credited a specific perk of being an Xbox-owned studio with the ability to bring these unconventional games to life—Game Pass.
In an interview with Wired, Josh Sawyer said, “Before being acquired by Microsoft, I don’t think I would have pitched this game, because I don’t think we could have found a publisher… But the fact that it can exist on a platform like Game Pass, where you’re already subscribed, so why not play the game with an artist with a flaming head?” At the same time, Hi-Fi Rush director John Johanas has talked about Bethesda management being hesitant about the game due to how much of a departure from the studio’s body of work it was. Ultimately, acquisition by Microsoft and the access to Game Pass offered a way to lower the game’s barrier to entry by making it accessible to the built-in subscriber base. When Hi-Fi Rush shadow-dropped, word of mouth quickly spread, in part due to its inclusion in the subscription service.
Both Pentiment and Hi-Fi Rush were both critically acclaimed games, with Hi-Fi Rush being called a “break-out hit” by Xbox marketing VP Aaron Greenburg. They seemed to signal that Xbox’s acquisition of studios could lead to something the AAA scene desperately needs—a willingness to take risks on interesting ideas. But now, with the continued closure of recently acquired studios including Tango Gameworks, it raises the question of what Game Pass is useful for. Sure, it will have the next big Gears game on it, but with big-budget development taking more time and money than ever before, those exclusives will be few and far between.
Between a larger industry trend toward risk-averse development and indie devs reporting that deals for the service are drying up, Game Pass is starting to feel potentially purposeless. The subscription service worked best when it allowed first-party developers to take risks they’ve always wanted to, risks that (as shown with Pentiment and Hi-Fi Rush) pay off. Without that, what else is there?
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