Microsoft to Shutter Xbox Entertainment Studios


Nancy Tellem, Jordan Levin and some of the XES team will stay on to work on existing projects including documentary “Signal to Noise.”

Amidst company-wide layoffs of up to 18,000, Microsoft has announced that it will be shutting down Xbox Entertainment Studios in the coming months.

Studio chief Nancy Tellem will remain with the company along with exec vp Jordan Levin and some of the XES team to work on existing projects such as documentary series Signal to Noise and the Steven Spielberg-produced Halo television series. The studio will also continue to work on the upcoming digital series Halo: Nightfall, which will be released as part of a collector’s edition of the Halo video game franchise this fall.

“Every member of Team Xbox should be incredibly proud of the impact and reach your work has within the walls of Microsoft, with our developer community and most importantly, with consumers,” said Xbox head Phil Spencer in an email to employees.

Xbox will continue to support interactive sports content such as NFL on Xbox. The company’s partnership with over-the-top app developers will not be impacted by the studio’s closure.

XES was established in September 2012 under former CEO Steve Ballmer when he hired CBS veteran Nancy Tellem to build out a team in Santa Monica and Vancouver. But the studio has been slow to market with its interactive original programming designed for a gamer audience, taking 21 months to premiere its first show, soccer reality series Every Street United, during the World Cup. Meanwhile, the studio has said that viewers wouldn’t get a taste of its scripted fare — including the buzzy Halo drama, which the studio is negotiating for a joint window on Showtime — until 2015.

Meanwhile, Xbox has found itself in an increasingly competitive landscape for original programming, with new entrants such as Sony’s PlayStation announcing plans for its own big-budget drama series.

The studio’s closure comes as new CEO Satya Nadella looks to realign the Redmond, Wash., business back to its core businesses to become more agile in the market. The majority of the company’s cuts will come from Nokia, the Finnish phone maker that it acquired for $7.2 billion last fall.

Spencer added in his email to Xbox employees that the company is renewing its focus on mobile-first and cloud-first technology and software, calling video games “the single biggest digital life category in the mobile-first world.”

“I have stated this before, but for Xbox to be successful, we must remain committed to being a consumer-driven organization with the mission of meeting the high expectations of a passionate fan base, to create the best games and to drive technical innovation,” he said.

“Change is never easy, but I believe the changes announced today help us better align with our long-term goals,” he concluded. “We have an incredible opportunity ahead of us to define what the next generation of gaming looks like for the growing Xbox community.”

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