Xbox and Embracer Group’s failures should be a warning against the acquisition arms race

Xbox and Embracer Group recently made some genuinely questionable changes that not only hurt their own internal studio's morale but also faltered the faith players had in them. Embracer Group has been only a rather aggressive "shutdown spree" closing legacy studios like Volition, after just one failed recent release, while also acquiring a handful of other smaller AAA and AA studios at the same time.

Similarly, Xbox, despite their promises of helping nurture all of their internal teams regardless of their performance in terms of sales or critical reception, seems to have resorted to cutting off studios. Just recently, Xbox shut down not one, but four Bethesda Softworks studios, including Arkane Austin and Tango Gameworks, without any prior notice.

These sudden (and admittedly jarring) studio closures are not only a major loss for both Xbox and Embracer Group, but they're also a stark reminder and perhaps even a warning against the "acquisitions arms race" amongst big AAA publishers.

Note: This article is subjective and reflects the author's opinions.

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Xbox and Embracer Group shutting down studios is a stark reminder of the grim nature of the acquisition arms race

While it's not okay to release a AAA title in today's time that fails to even function as a basic video game, it's also not okay to shut down an entire studio just because they failed at delivering a "million-dollar-hit" title. Both Volition and Arkane Austin, despite being incredibly talented, failed to deliver an acceptable product with their most recent games.

However, that shouldn't be a reason to simply shut the entire studio down and dismantle the livelihood of developers within it. Bethesda was (and still is) known mostly for their Fallout and Elder Scrolls titles, i.e., anything that's developed by Bethesda Game Studios and under Todd Howard's direct supervision.

While their smaller internal studios never produced massively successful titles like that of BGS, they were still around, making the game they wanted to. Remember 2017? That year was stacked with Bethesda titles, and genuinely good ones at that, but none of them were from Bethesda Game Studios.

2017 saw the release of Prey (2017), The Evil Within 2, and Dishonored Death of the Outsider, two games that are highly underrated in their respective genres. Arkane Austin has a track record of good games before Redfall. 2017's Prey is still heralded by many as the gold standard of modern immersive sims, and so is its roguelike DLC, Mooncrash.

Additionally, Redfall never felt like a game that Arkane wanted to make in the first place. It felt more like a game that the upper management at Zenimax wanted Arkane to make, to cash in on the "live-service" trend. Had the studio been given another chance at making their dream game, we could've gotten something genuinely impressive.

The same goes for Volition, the studio behind Saints Row, a series that once held its own against Grand Theft Auto 4, with Saints Row 2. While the series eventually drifted away from its grounded nature towards a more whacky "over-the-top" tone with Saints Row 3, it was still an IP that was near and dear to many players.

Yes, the most recent Saints Row might not have performed that well, but there was a chance that Volition could've delivered something really great in the future. A future that we'll never get to see anymore thanks to Embracer Group liquidating Volition.

There's nothing inherently wrong with bigger publishers funding and acquiring smaller studios, just look at Epic Games and how their funding Remedy Entertainment allowed the Finnish studio to make their dream project in Alan Wake 2. However, there's also the fact that such publishers would expect a bigger payout for their investment.

And while some studios can deliver those blockbuster sales via their pre-established IPs or live-service titles, not all studios can, or even have to. That shouldn't be a reason to have those smaller studios liquidated, just because they weren't raking in profits on the same level as something like EA Sports titles, or Call of Duty.

This is precisely why bigger publishers acquiring smaller AAA or even AA publishers or developers is a scary proposition. With bigger investments, there will always be the expectations of even bigger payouts, which frankly isn't within the realm of possibility for smaller studios under Xbox, like Arkane Austin and Tango Gameworks.

These studios specialize in creating games and experiences that are quite niche. While Hi-Fi Rush was a smash-hit, and perhaps the only good Xbox first-party title since 2021, it was still very niche, there's no way it could've sold the same amount of copies as the annual Call of Duty, Halo, or other major Xbox IPs.

Games, much like any other form of media (books, movies, etc.), are a work of art, created by individuals willing and able to tell a story, their story through an interactive medium. Quantifying their creativity and work based on copies sold or players retained is not only ignorant but also a blatant disrespect to said developers and their craft.