The dust is still settling over Xbox’s “big reset” cuts, and will continue to settle for many weeks to come just yet.
Microsoft CFO Amy Hood has led a massive job culling across the firm, with almost 5,000 staffers set to lose their roles over the next fiscal year. 3,200 of those will be in Xbox alone, with some escaping as divestitures. Remaining studios have been “gutted” by some accounts, with massive reductions at Obsidian and id Software, despite success stories in Grounded 2 and DOOM: The Dark Ages.
The silver lining for some is that Xbox execs spent the past few weeks finding buyers for studios Microsoft’s CFO lined up to otherwise shut down. One of those is Undead Labs, makers of State of Decay, who have been through hell and back to get to where they are today.
Undead Labs was founded in 2009 and acquired in 2018, as Xbox sought to bolster its exclusive content spread for Xbox. The integration was immediately met with problems.
Undead Labs leader, co-founder, and World of Warcraft alumnus Jeff Strain left the studio in 2019 not long after the acquisition, and then the firm was immediately hit with lockdown regimes heading straight into the Covid-19 pandemic. The disruption was palpable.
Unable to properly incubate State of Decay 3, Undead Labs worked on free updates for State of Decay 2 as Microsoft struggled to properly integrate the studio and teams. Despite State of Decay 3 being announced in 2020, it wouldn’t actually enter full development until far later.
These should be mitigating factors when Microsoft’s bean counters were looking at ways to reduce costs. But, in Microsoft’s typical, disappointingly short-sighted fashion, Microsoft seems oddly unaware of the potential it has in the palm of its hands.
Indeed, as of writing, State of Decay 3 is presently the 28th most wishlisted game on Steam, and comes in higher than Halo Campaign Evolved and Gears of War: E-Day both. As far as Xbox games go, State of Decay 3 is second only behind big-budget blockbuster Fable.
State of Decay 3 was by far my most anticipated Xbox game this side of Clockwork Revolution. The early alpha glimpses we’ve gotten look incredible, and as an evolving multiplayer title, it has the painfully obvious potential alongside games like Grounded and Sea of Thieves.
It’s utterly absurd and frustrating that Microsoft, for whatever reason, weren’t able to give them just a bit more time and subsidize their own mistakes. Microsoft banks billions of dollars annually, and there’s really no excuse for the disruption and havoc it is imparting onto its teams.
I’m not naïve. I know quite painfully well that in order to get paid, you have to have a business that makes money — at least eventually. But at the same time, Microsoft is also among hyperscalers chasing AI infrastructure expenditure based on theoretical growth, using the models of companies funded entirely by theoretical money.
Of all the cutbacks and nonsensical choices Microsoft has made this week, State of Decay 3 above all, for me, underpins how Microsoft’s fiscal management policies all too often make for hasty self-defeating mistakes.
There are arguably projects at Xbox that shouldn’t have been greenlit, and there are strategic decisions made that remain utterly questionable for sure — but Microsoft is making so many baffling choices to pay for those mistakes. For me, the fact Xbox has been forced to divest State of Decay 3 really represents the apex of Microsoft’s generalized ignorance.
In the future, I look forward to writing about how studios like Undead Labs expanded and became success stories free of Microsoft. But there are many hundreds of developers who might not be so lucky.
Perhaps the thousands of employees that remain at Xbox will benefit from a more focused Xbox managerial structure not spreading themselves so thinly, but it remains to be seen. And perhaps I actually am being naïve here.
Microsoft has created an environment where every FY end in July, we’re writing articles like this. Being reminded of missed opportunities, and the human costs of Microsoft’s legendarily short-sighted impatience.
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