Phil Spencer Says Halo Studio Remains ‘Critical’ To Xbox Despite Cuts

Things haven’t been going great for Xbox recently. Microsoft is facing stiff resistance in its attempt to acquire Activision Blizzard. It released hardly any big exclusive blockbusters last year. And it just cut over 10,000 jobs last week, including many senior developers at Halo Infinite studio 343 Industries. Microsoft Gaming CEO Phil Spencer tried to remain upbeat and do damage control on each of these points and more in a new interview with IGN.

“Every year is critical,” he said. “I don’t find this year to be more or less critical. I feel good about our momentum. Obviously, we’re going through some adjustments right now that are painful, but I think necessary, but it’s really to set us up and the teams for long-term success.”

This week captured both the peril and promise facing Xbox right now. On Tuesday, Microsoft announced a drop in net-income of 12 per cent for the most recent fiscal quarter compared to the prior year. Xbox gaming hardware and software were down by similar percentages, and Microsoft said nothing about how many new subscribers its Game Pass service had gained since it crossed the 25 million mark exactly a year ago.

Then on Wednesday Microsoft provided a sleek and streamlined look at its upcoming games in a Developer Direct livestream copied right from the Nintendo playbook. Forza Motorsport was seemingly quietly delayed to the second half of the year, but looked like a beautiful and impressive racing sim showpiece. Arkane’s co-op sandbox vampire shooter Redfall got a May 2 release date. Real-time strategy spin-off Minecraft Legends will hit in April. And to cap things off Tango Gameworks, maker of The Evil Within, shadow-dropped Hi-Fi Rush on Game Pass, a colourful rhythm-action game from left field that’s already become the first undisputed gaming hit of 2023.

“2022 was too light on games,” Spencer confessed in his IGN interview. 2023 shouldn’t be thanks to Redfall and Starfield, Bethesda’s much-anticipated answer to the question, “What if Skyrim but space?” But both of those games were technically supposed to come out last year. Meanwhile, Hi-Fi Rush, like Obsidian’s Pentiment before it, is shaping up to be a critically acclaimed Game Pass release that still might be too small to move the needle on Xbox’s larger fortunes.

Spencer remained vague when asked how successful these games were or their impact on Game Pass, whose growth has reportedly stalled on console. “I think that the creative diversity expands for us when we have different ways for people to kind of pay for the games that they’re playing, and the subscription definitely helps there,” he said.

Hi-Fi Rush, Redfall, Starfield, and a new The Elder Scrolls Online expansion due out in June are also all from Bethesda, which Microsoft finished acquiring in 2021. The older Microsoft first-party game studios have either remained relatively quiet in recent years while working on their next big projects, or, in the case of 343 Industries, were recently hit with a surprising number of layoffs.

Following news of the cuts last week, rumours and speculation began to swirl that 343 Industries — which shipped a well-received Halo Infinite single-player campaign in 2021, but struggled with seasonal updates for the multiplayer component in the months since — was being benched. The studio put out a brief statement over the weekend saying Halo was here to stay and that it would continue developing it.

Spencer doubled down on that in his interview with IGN, but provided little insight into the reasoning behind the layoffs or what its plans were for the franchise moving forward. “What we’re doing now is we want to make sure that leadership team is set up with the flexibility to build the plan that they need to go build,” he said. “And Halo will remain critically important to what Xbox is doing, and 343 is critically important to the success of Halo.”

Where Halo Infinite’s previously touted “10-year” plan fits into that, however, remains unclear. “They’ve got some other things, some rumoured, some announced, that they’ll be working on,” Spencer said. And on the future of the series as a whole he simply said, “I expect that we’ll be continuing to support and grow Halo for as long as the Xbox is a platform for people to play.” It’s hard to imagine Nintendo talking about Mario with a similar-sounding lack of conviction.

It’s possible Microsoft’s continued struggles with some of its internal projects is partly why it’s so focused on looking outside the company for help. Currently that means trying to acquire Activision Blizzard for $US69 ($96) billion and fighting off an antitrust lawsuit by the Federal trade Commission in the process. Microsoft had originally promised the deal to get Call of Duty, Diablo, World of Warcraft, and Candy Crush would be wrapped up before the end of summer 2023. That deadline’s coming up quickly, even as the company continues offering compromises, like reportedly giving Sony the option to continue paying to have Activision’s games on its rival Game Pass subscription service, PS Plus.

Spencer told IGN he remains bullish on closing the deal, despite claiming to have known nothing about the logistics of doing so when he started a year ago. “Given a year ago, for me, I didn’t know anything about the process of doing an acquisition like this,” he said. “The fact that I have more insight, more knowledge about what it means to work with the different regulatory boards, I’m more confident now than I was a year ago, simply based on the information I have and the discussions that we’ve been having.”

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