None of us are privy to the financials. But there are corporate interests in seeing a streaming model succeed that supersede the bottom line for the next quarter. Using my movie example from before : Was in in the best interests of the animators at Pixar for Disney to release Seeing Red and Soul (two excellent films, BTW) directly to Disney+ in '20-21 rather than waiting and bringing them to theaters after the pandemic? Pixar laid off 14% of its workforce last year. Was that due to the quality of the films released, or was it a byproduct of decresed revenue at least partially due to the direct-to-streaming features not grossing what they were initially expected to?
Yes, I know games and movies are different, but since movie financials are much easier to find and more transparent than video game grosses, it's an easier example. And like I said, Disney had total say in the strategy, and that strategy benefitted their streaming platform at the same time it hurt their animation studio, which provides content for the streaming service.

Layoffs at Polygon and Giant Bomb happened today too. Games media is taking a big hit too.

https://kotaku.com/polygon-sold-vox-...ing-1851778655

https://kotaku.com/giant-bomb-fandom...ann-1851778728

I loved Giant Bomb. I hate that Grubb and Ryckert are gone.

Another studio shutters and another superhero game gets canceled.

X - Formerly Twitter

I honestly didn't even remember there was a Black Panther game in development...

More layoffs at People Can Fly.

I am starting to wonder how any new video games are created and if, by chance, they are created, do they all lose money?

Had to Google "People Can Fly". Never played any of their games, or even heard of most of them.

More Xbox layoffs incoming, per Jason Schreier at Bloomberg:

^ 9000 layoffs across Microsoft!

Rare's game Ever wild is canceled

Zenimax's new MMORPG has been cancelled too.

It gets worse....

And they’re shuttering The Initiative (so Perfect Dark is cancelled), and Turn 10 looks to basically be a Horizon support studio now.

Awful news and I hate to see anyone lose their jobs. Especially in video games, which is not some cakewalk profession. The marketplace is just getting tougher and tougher.

And maybe, just maybe, prominently, featuring a business model, designed specifically to undermine the sales of eighty to ninety percent of your AAA exclusive games at launch might be hurting the bottom lines of the studios you own?

Honestly, I think this is less about Game Pass and more about Microsoft being Microsoft. MS is slashing and burning across the company, despite having peak share prices, peak revenue, and one of the largest operating margins in the industry.

Microsoft leadership believes (or at least believed) strongly in Game Pass, given MS' emphasis on being a services-based company rather than a buy-it-and-"own"-it-product-based company.

The math for Game Pass makes sense in at least some respects, but it only really works with continuous, rapid growth and reaching an audience that aren't already avid gamers (many/most of whom don't even own a console), and that hasn't been the case at all.

Somehow this showed up on my X feed. An Xbox senior employee announces he lost his job. Bummer

I'll be the asshole for a moment and say that maybe- just maybe, selling out your studio to a massive corporation isn't in the best interest of the company long term. It truly sucks for the employees that are just pawns in the corporate game, but hopefully up and coming studios are taking note and aren't so quick to sell out.

True. In some (not most… I don’t know… but probably not) non-tech industries, companies buying out other companies can generally lead to some stability and meaningful growth. But tech, and video games in particular, is so volatile. I think smaller companies are realizing they might just be better off doing their own thing and partnering with distributors rather than consolidating.
The problem lies with companies choosing to accept buyouts instead of telling the big companies to pound sand. That’s on their management, because ultimately, nobody is stopping the big companies from making offers. That’s what they do. I’m not excusing it, just stating what’s expected of them.
But, when those smaller companies are big enough to have their own board of directors, they’re more likely to take a buyout because the boards usually only care about the money.

However, more importantly, I think nobody in the industry was prepared for just how disruptive free to play games would be over the last decade. I think Adam shared data a few months ago, showing that there’s like five big games, and then a massive drop to everything else. The fact is that aside from some tentpole titles, basically nobody is buying more than a handful of games, if that.

in the music industry, people seem to forget that subscription models came about in response to a complete and utter deflation of the market. Piracy reigned supreme and barely anyone was buying music anymore. These days, there’s some slight resurgence in physical ownership, especially among those that never gave up on it, but music piracy is… not dead, but inconvenient enough that the vast majority of people don’t bother.

Back to games, I’m not saying free to play is exactly like piracy, but it’s kind of the same vibe if that makes sense. There’s millions of gamers who have zero interest in buying games outright, and also see no need for a subscription if all they’re playing is a couple free to play games each year.
When the choice is $80 for game X, or $0 to keep playing game Y’s latest season, then game Y isn’t just good enough, it’s exactly what they want.

Subscriptions are a bit different in that they have not become the default like with music, and I think that’s only somewhat because of the remaining people who want to own every game. I think the bigger reason is that, as said, the biggest chunk of gaming time is spent on free to play games and there’s zero incentive for those gamers to buy into a subscription for games they’ll never touch.

I think that’s why the industry is at this major pivoting point, where good and great studios just can’t keep up, and where the giant companies make massive cuts to appease only the shareholders, and where subscriptions have flattened while free to play only thrives for the lucky few titles that find an audience in any given year.

I think a lot of the problem is on consumers. People are complete illogical idiots. Everyone says they hate subscription models but there's a reason why subscription models reign supreme in this economy. We've voted with our dollars on everything from video games, movies, music, software, hell even cars. That we want a subscription based model. So yeah everyone balks at an $80 Mario Kart game. But how much are teens and parents paying on stupid Fortnight skins? Or Robucks? Maybe I'm just old fashioned but just let me pay for the damn game upfront. We're getting exactly what we've voted for. Everything is going to conglomerate into just a few giants of media and push out all the independent thought and creativity.

And Microsoft is also pulling funding from other developers. Romero Studios laid off their entire staff after a title Bethesda was going to publish pulled the plug. Contraband (which has been MIA since the initial reveal four years ago) made the reveal trailer private, which doesn't bode well.

well, i know that more will stay employed thanks to my over buying all their products.

All y'all know the tune, so please, sing along!
--
... I'm only joking.

Two studio heads discuss Game Pass and how it's an unsustainable model that will really hurt the gaming industry.

The economics make sense if Microsoft were able to reach the audience they intended, but obviously Game Pass is a long way from 100 million subscribers. And there are undeniably games -- debuting on PS+ and Game Pass -- that are marked successes because of their availability on these services. I don't think Game Pass can really be pointed to as a meaningful factor in the rickety state of the industry, though, especially given the dominance of a tiny handful of free-to-play/forever games (compared to a service that's a long way from dominant and is heavily oriented around the least popular console on the market).

I don't think Game Pass is meaningfully to blame for the quarterly purges at Xbox. With the way things are going, though, I do worry that Microsoft is going to fall into a fewer-but-bigger-games paradigm where the studios that specialize in smaller titles are not long for the world. And generally I worry because how many quarterly layoffs can you suffer and still have a viable business?

FWIW, industry analyst Mat Piscatella’s take: