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Microsoft's Xbox shuts multiple studios, consolidates teams in cost-cutting move

FILE PHOTO: Head of Microsoft Xbox Phil Spencer speaks during the Microsoft Xbox E3 2017 media briefing in Los Angeles

(Reuters) - Microsoft's Xbox is shutting down a number of gaming studios including Arkane Austin, making it the latest publisher to shut down studios amid signs of a gaming slowdown.

Studios such as "Hi-Fi Rush" maker Tango Gameworks, headquartered in Tokyo, and Canada-based Alpha Dog will also be closed and some employees will be laid off, Matt Booty, head of Xbox Game Studios said in a memo that was seen by Reuters on Tuesday.

Xbox declined to comment when asked about the number of employees impacted by the layoffs.

Growth in personal computing and console gaming is expected to remain below pre-pandemic levels as gamers record fewer hours of playtime owing to weaker release schedules, data from research firm Newzoo showed.

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The "reprioritization of titles and resources" is so that Xbox can invest deeply into its portfolio of games and new intellectual property, according to Booty.

All the affected studios are units of ZeniMax Media, which was acquired by Microsoft for $7.5 billion in 2021, and Bethesda.

Microsoft's Xbox content and services segment reported a 62% jump in third-quarter revenue last month, largely driven by the Activision Blizzard acquisition.

"Grand Theft Auto" maker Take-Two Interactive said it would shut down two subsidiary studios as part of a mass layoff, Bloomberg News reported last week.

Microsoft previously laid off 1,900 employees at Activision and Xbox at the start of the year.

Some developers from Arkane Austin will join other studios and work on projects across Bethesda, the creator of "The Elder Scrolls" and "Fallout" titles.

Servers of the game "Redfall", made by Arkane, will continue to remain online for players.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta)