Why were Arkane Austin and Tango Gameworks shut down by Xbox?

Xbox recently announced the unfortunate shutdown of Arkane Austin and Tango Gameworks, two of the most iconic studios under Bethesda Softworks. This comes just a couple of months after Microsoft announced their plans to cut approximately 1900 jobs across the entirety of the publisher and console manufacturer's gaming division, including Xbox's first-party studios.

Apart from Arkane Austin and Tango Gameworks, two more Bethesda Softworks studios were closed - Alpha Dog Studios, the developers behind Mighty Doom, and Roundhouse Studios, which serve as a support studio for Elder Scrolls Online. What is a bit confusing for many players is why these cuts were made in the first place.

While the official statements made by both Arkane Austin and Tango Gameworks did not explicitly mention the reason behind the shutdowns, Xbox Game Studios head Matt Booty did give an official statement (via IGN) on why these sudden and drastic changes were made.

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Arkane Austin, Tango Gameworks, and two other smaller studios at Bethesda shut down for "reprioritization of titles and resources" at Xbox

Both Arkane Austin and Tango Gameworks put out an official statement on their official X account regarding the shutdown. However, the statements don't reflect the exact reasons behind the sudden closure of these legacy Bethesda Softworks studios. However, Matt Booty, Xbox Game Studios head, mentioned the exact reasons for the cuts via an email sent to IGN.

Matt Booty blamed the studio shutdowns on “reprioritization of titles and resources,” which essentially translates to the said studios underperforming in terms of commercial sales. In the letter to IGN, Matt Booty stated:

"Today I’m sharing changes we are making to our Bethesda and ZeniMax teams. These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades."

Booty further elaborated on the business side of the decision:

"To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us."

Both Arkane Austin (and even Arkane Lyon) as well as Tango Gameworks have struggled with sales, despite their titles being received quite well among players.

While Arkane Austin's most recent title, Redfall, wasn't particularly well received, their past projects, Prey (2017) and its roguelike DLC, Mooncrash, are heralded by many as the pinnacle of modern immersive-sims. Meanwhile, Tango Gameworks' most recent title, Hi-Fi Rush, is arguably one of the best Xbox first-party releases in recent memory.

While it is disheartening to see studios like Arkane Austin and Tango Gameworks getting dissolved, it's something that has been a regular occurrence in the last few years. Even last year, studios like Volition (Saints Row series) and Pixelopus (Concrete Genie) were shut down, with numerous layoffs across the entire AAA gaming industry.