Microsoft Shuttering Xbox Entertainment Studios17 Jul, 2014 By: Erik Gruenwedel
Amid the 18,000 layoffs company wide, software giant axes nascent attempt at creating original video content
Microsoft’s late arrival to creating original programming apparently is dead. The software behemoth announced July 17 it will be shutting down Xbox Entertainment Studios (XES) among companywide cutbacks imposed by new CEO Satya Nadella involving about 18,000 employees.
Recently hired XES president Nancy Tellem will remain to shepherd through original content already in production, including documentaries and episodic fare related to the Halo franchise.
Intended to replicate original content efforts by Netflix, Amazon Studios and Hulu, Xbox Studios struggled to find its footing until it hired Tellem away from CBS. Under her guidance, Tellem partnered with Steven Spielberg and others for a slate of original programming — some of which is now in limbo.
Of the total Microsoft staff cuts, about 12,500 professional and factory positions will be eliminated through synergies and strategic alignment of the Nokia Devices and Services business acquired by Microsoft on April 25.
Microsoft expects to incur pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.
Phil Spencer, head of Microsoft’s Xbox division and Microsoft Studios, in a memo to staff confirmed that XES would be closing as part of the cuts. Spencer said Microsoft remains focused on a mobile-first and cloud-first world, with video games — not videos — as 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,” Spencer wrote. “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.”