Skip to main content

"Being acquired is a stepping stone to having your studio shut down" Gaming founders and CEOs speak out on the current state of the industry

We reached out to various video game studio owners following Microsoft's closure of Tango Gameworks, Arkane Austin, and more.

Text reads 'Game Over' and Chai from Hi-Fi Rush lies in the middle of a spotlight, surrounded by black.
Image credit: Tango Gameworks

This week's news of Microsoft shutting down several studios - including Tango Gameworks and Arkane Austin - has left an especially sour taste in the mouth of pretty much everybody. It's the latest entry into the acquisition fallout saga - which seems to be one of the biggest hits in the video game industry right now. Activision Blizzard's post-acquisition cuts, Embracer group ruthlessly gutting studios it's bought. It begs the question - why would CEOs even want to sell their studios to one of these massive companies right now?

To find out, we reached out to various CEOs and founding members of independent studios to give their thoughts, under an assurance of anonymity. The answers we got back will likely match your assumptions; if it can be avoided, an acquisition is absolutely something to avoid. This is especially the case now, with the bruises of recent news still sore, but recent reports have also emboldened pre-existing sentiments on the matter.

One source – when asked if they'd want to be acquired by Microsoft or Sony right now, even with the huge influx of cash that would bring - painted a clear picture.

"F**********ck no. Its just too clear that being acquired is a stepping stone on the path to having your studio shut down for no good reason other than to meet a giant corporation's fiscal quarter goals," the source, who wishes to remain anonymous, told VG247. "I guess if my only other option was to shut down anyway, we might as well get acquired to delay that a bit and line my pockets. But that's not the case right now."

Another source provided some insight into the dangers of such acquisitions and why exactly companies like Tango Gameworks, even if they're successful, are getting cut from massive companies, post-acquisition.

"I think everyone who enters into an acquisition knows what they are doing, and that big companies operate on large scale corporate strategies that can change in an instant. For a while there was a feeling that streaming and subscriptions were the future, so a high volume of games was desirable, then Game Pass slowed down and the corporate strategy seems to have shifted back to 'fewer, bigger brands' which is a perennial slogan for most big publishers. This meant the smaller studios, those that weren't aligned with the big brands, and those that have had a recent failure were culled to align with it."

Hi-Fi Rush is a succesful game... that ultimately spelled the end for Tango Gameworks.

This source continues: "The challenge is that these big corporations, which are usually now run by sales or marketing people, don't understand how hard it is to build talent, to find a team that can work together to ship ANYTHING, and that this process can take years. So they have a short term gain of cutting costs, but they will have less teams to make games for them in the future. That said, when you sell your company, you are selling your ability to control or stop this in exchange for a cash injection. And this story has repeated itself a hundred times at Activision, MS and more. If you don't want to be at risk from the whims of corporate overlords, you shouldn't sell your company."

Recent news has put a spotlight on Microsoft and its particularly dire fumble, but all interviewees I spoke to emphasized that this is by no means a problem unique to a particular company. Opinions on big aquisitions - regardless of the buyer - come with serious risks.

"I think today's news has further proven you can't trust anyone," one source states. "Any publicly traded corporation is, by definition, only concerned about profits, growth, and appeasing shareholders. Embracer is the worst of them since they're run by a bunch of f***-ups but even the richest company in the world, Microsoft, is not your friend, and will ruin lives to optimize the books. It doesn't matter how many podcasts Phil Spencer goes on to talk about the happy family of Xbox studios, it's only until its no longer convenient for them."

If Activision Blizzard King - a golden goose that Microsoft paid dearly for - got cuts and games cancelled, then who is safe?

Another CEO points to the complicated pros and cons one has to consider when a company - any company - comes around with a lot of money to offer you.

"You are always making decisions based on very specific concerns that are based in the 'now': how much cashflow do you have, how much security do you have, do you have a publisher for your next game, how much money do you have in the bank to keep you going while you search? It is all very subjective. Not many independent studios have huge cash reserves, so you are always doing what's best for your team and your game and your company. So I could completely imagine selling to a publisher or a first-party because that could make the most sense in the moment, but it is filled with risks and it changes how you need to operate. There is no such thing as a free lunch."

One source found their longheld beliefs on acquisitions reinforced, with recent news only drawing a line under the topic. "I've always held that position so this hasn't done anything other than to reassure me that mergers and acquisitions usually always end poorly for game studios. The current state of things is that it sucks".

So if being bought out is rough right now, what's the best position for a development studio to be in? The answer? Well, given the current state of things there's no totally safe harbour for a developer. But being self-owned, not over-bloated, and just having your own hands on the steering wheel feels like the way to go.

Content Warning official screenshot
Some of the biggest games this year have been from very small, independant studios. | Image credit: Landfall Games

"The safest position is one unconcerned with growth. The more you scale, the more wildly successful you need to be to sustain your burn rate," one source puts it. "Be satisfied with your studio size and make games that are sustainable for it. Great games come in all sizes. Let's not pretend like independence guarantees any kind of safety, but at least you're in control."

Another emphasizes the risk of game development in general, but also points to not chasing that temptation to over-expand as a helpful rule to work by.

"Games are a hit-based business. It changes rapidly, both in terms of audience and mood, so it is incredibly risky no matter where you are. It is not a business to get into if you are afraid of risk or crave eternal stability. I have moved country, let alone studio, twice in search of better projects. And that isn't for everyone. Our strategy is to stay small, stay a single game studio, focus all of the team's talents on one project, then move onto the next trying to build a buffer in the bank.

"The more people you have, the bigger your monthly costs, which means you can run out of money fast if you're indie, but also you can look like a big money hole if you're inside a publisher. Stay small, make fresh games, then try again!"

No matter how you see yourself, it's a dangerous industry for everyone at the moment.

2024 has been a disaster for the games industry. You can read coverage of the myriad layoffs that have occured here, here, here, here, here, here, here, here, and here. Various outlets are reporting that this is not the end of the planned layoff roster, either. This immense culling of talent and studio diversity will no doubt have huge repercussions on the video game industry in the coming weeks, months, years and – honestly – generations. It's a sad time to be a creative in one of the most proiftable entertainment businesses in the world, and perhaps time we took a long, hard look at why that may be the case.

Read this next

news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news