Elder Scrolls Online boss warns Xbox shift began with studio closures

Matt Firor is treating Xbox’s studio closures as more than a painful one-off. The longtime Elder Scrolls Online leader said the shutdowns of Arkane Austin and Tango Gameworks felt like a warning sign of where Microsoft Gaming was heading, and he pointed to the collapse of ZeniMax Online Studios’ MMO Project Blackbird as proof that the pressure reached inside his own studio.

Microsoft announced on May 7, 2024, that it was closing Arkane Austin, Tango Gameworks and Alpha Dog Games, while moving Roundhouse Games into ZeniMax Online Studios. Sarah Bond said three days later that the cuts were meant to keep Xbox “healthy for the long term,” and she described the industry as “flat,” adding that Xbox had a deep responsibility to make sure its games, devices and services could withstand a period of transition. Phil Spencer later said he had to make hard decisions to run a sustainable business.

Firor’s warning lands differently because it comes from someone who spent years inside the machine. In a recent MinnMax interview, he described the closures as a turning point and compared the moment to EA’s layoff era in 2008 and 2009, framing it as a broader strategic reset rather than a single round of cost-cutting. That is a stark read from the founder of ZeniMax Online Studios, especially at a time when developers are already watching Microsoft’s moves for signs of how much freedom large internal teams still have.

The symbolism of the 2024 closures mattered too. Arkane Austin had been working on Redfall, which Spencer had already called disappointing. Tango Gameworks had just shipped Hi-Fi Rush in 2023, a game widely seen as the studio’s most successful recent release. Dinga Bakaba, creative director at Arkane Lyon, called the closures “absolutely terrible” and urged executives to treat developers with more care.

Firor’s own breaking point came later. Project Blackbird was canceled during Microsoft’s gaming cuts in summer 2025, even though Spencer reportedly liked what he saw. Firor later said that cancellation contributed to his departure from the company. Taken together, the May 2024 shutdowns and the 2025 Blackbird cancellation suggest a narrower window for ambitious internal bets at Xbox, where even a veteran studio with a live-service hit can no longer assume long-term patience.