Microsoft to close Xbox Entertainment Studios

Microsoft to close Xbox Entertainment Studios

Summary: Microsoft is closing Xbox Entertainment Studios as part of its attempt to focus on its core businesses. There's no word on the resulting headcount reduction.


The rumor from Variety today was true. Microsoft is closing its Xbox Entertainment Studios that was charged with developing original programming for Xbox as part of the company's planned layoffs of 18,000 employees.


Microsoft had been touting its hire of former CBS executive Nancy Tellem and its plans to develop custom content as core to its Xbox expansion plans. But recently, Microsoft officials have signaled they are bringing their Xbox focus back on gaming and gaming content/experiences.

Xbox Entertainment Studios will be closing within months. There's no word (so far) from Microsoft how many job cuts this involves.

Here's an excerpt from Xbox chief Phil Spencer's July 17 e-mail to employees about the closing:

“I hope you have had a chance to read today’s mails from Satya. I wanted to take a moment to share a few thoughts on what this means for our team and some of the changes we are making as a result.

In last week’s mail outlining some of the steps towards creating the culture and organization to bring our ambitions to life, Satya called out the strategic importance of Xbox as a strong consumer brand, a creative center for gaming and a leader in bold innovation. 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.

Microsoft is the productivity and platform company for a mobile-first and cloud-first world, and games are the single biggest digital life category in a mobile-first world. Success in this category, by growing a robust Xbox business, brings additional value to Microsoft. 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.

As part of the planned reduction to our overall workforce announced today and in light of our organization’s mission, we plan to streamline a handful of portfolio and engineering development efforts across Xbox. One such plan is that, in the coming months, we expect to close Xbox Entertainment Studios. I would like to take this opportunity to recognize the accomplishments from the entire team in XES. They have built an impressive slate of original programming and pioneered interactive entertainment on Xbox, such as the innovative reality series ‘Every Street United’ that succeeded in uniting audiences around the globe during the recent World Cup. I am pleased that Nancy, Jordan and members of the XES team remain committed to new, original programming already in production like the upcoming documentary series ‘Signal to Noise’ whose first installment takes on the rise and fall of gaming icon Atari and of course, the upcoming game franchise series ‘Halo: Nightfall,’ and the ‘Halo’ Television series which will continue as planned with 343 Industries. Xbox will continue to support and deliver interactive sports content like ‘NFL on Xbox,’ and we will continue to enhance our entertainment offering on console by innovating the TV experience through the monthly console updates. Additionally, our app partnerships with world-class content providers bringing entertainment, sports and TV content to Xbox customers around the world are not impacted by this organizational change in any way and remain an important component of our Xbox strategy.

Change is never easy, but I believe the changes announced today help us better align with our long-term goals. We have an incredible opportunity ahead of us to define what the next generation of gaming looks like for the growing Xbox community. I have a great deal of confidence in this team and know that with clarity of focus on our mission and our customers we can accomplish great things together. We already have.

Thank you again for all you do for Xbox.


In addition to the Xbox entertainment programming, other products Microsoft is eliminating as part of its layoff/consolidation plans include its Nokia X Android phones and Asha and S40 feature phones.

Topics: Microsoft, Leadership


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • Ohh come on!!!

    XES original games were excellent. I guess they just were not profitable.
    Sean Foley
    • Did they release anything?

      I didn't think that project had produced anything yet? What was it? None of the announced shows really seemed interesting to me.
      Buster Friendly
      • Correction

        Reading more info on this around the web indicates that its only shutting down a 200-person studio, located in Santa Monica, Calif, rsponsible for XBox original video. For a minute I though that it was shutting down gaming studio and development.
        Sean Foley
  • Never understood why they had XBOX to begin with

    PC is a good enough gaming platform already. No need to divert their energy to build a whole new hardware platform. It profit potential is never high. Just look PS series - a niche market.
    • Not Xbox

      This is Xbox Entertainment Studies which was making some original television programs to distribute on the Xbox.
      Buster Friendly
    • Why XBOX?

      It could have been the center/hub of their home entertainment system. They had Mediaroom but not the horsepower in the STB's to do "big" things. XBOX was an avenue to more cpu power.
  • At least they're not killing off the Halo series

    that needs to happen.
  • Perhaps with their renewed focus

    They could produce a better console than Sony on their next try...
    • Already did

      Uh, they already did that by a long shot. Sony is very backwards in even basic modern things like multi-tasking. The company as a whole has that issue of being kind dead in the in the water since their big success in the 90s.
      Buster Friendly
  • Is Microsoft bracing for a loss of Android patent revenue?

    Looking at what that money was spent on and where some cuts are coming it makes one wonder, considering the recent shinning of the light-of-day on the Android/Linux patent deals.
    • No

      That's such a drop in the bucket it's meaningless.
      Buster Friendly
    • I doubt that

      That would be like Ford closing an entire automotive division because Tesla isn't buying lug nuts off of them anymore.

      It's really not that big a revenue stream.
  • It seems to me that Microsoft's Xbox Brand may be in trouble.

    My 15-year-old dumped his Xbox (and games) so he could buy a Sony PS 4 and he hasn't even looked back. So did his best friend. They have no regrets. (Good for them. Not so good for Microsoft.) Changing the direction of the Xbox One to be more of an entertainment/TV device lost my son (and apparently millions more) as a customer.

    This seeming reversal supports my impressions but can Microsoft rebuild what it has lost by dissolving XES? Without having third-party developers in the wings to take up the slack, I don't see how.
    M Wagner
    • PSx vs Xboxx

      I had a PS3 died two times of overheating. I gave up after the second one was out of warranty. Aghhhh... Got an xbox360, never looked back.
      • I'll cancel you out

        I bought an original piano black PS3 5 years ago, it is still going strong, not a single problem. Bought a PS4 in January, no problems with it either.

        Just wondering: Was your PS3 sitting on top, or above, your XBox? Would explain your overheating issue.
        • Cancelling person.. :-)

          Nope. But it did run perpetually for 3.5 years. I guess I was using it like a home entertainment hub and it wasn't up to the task.

          BTW, The xbox360 get's turned off when not in use. :-)
          • That's an issue too

            Yea, that's an issue too. A lot of consoles weren't design for a 24x7 duty cycle. That's one reason the Xbox One went with a large case with plenty of air flow. I haven't even notice it getting warm to the touch or have an audible fan speed.
            Buster Friendly
        • Well, my anecdote...

          I've never had a game console fail of any type except the Wii optical drive started buzzing sometimes but never failed. Usually the heat issues are because people put them in an enclosed cabinet without good ventilation. .
          Buster Friendly
    • Wow! Your anecdotal evidence of 2 people, and then you extrapolated that

      into "millions" of people giving up on XBox?

      Hopefully, you don't work and never worked for any company doing statistics or surveys. Dopey conclusions would have been the only results.
      • Xbox 360 was junk

        Microsoft spent billions on fixing the 360. Mine went back 4 times. It's still working, but only because it gets very occasional use. This kept me from buying one.

        Additionally, their exclusives to date, have not been very good. And their focus on entertainment to pad their bottom line has been a bust.