James R | On 20, Jul 2014

Microsoft is closing Xbox Entertainment Studios, amid new streamlining plans that will see thousands of employees laid off.

The original content market has become crowded of late. While Netflix and Amazon continue to drive forward new online video projects, everyone from AOL to Yahoo! has started to step up their game. Yahoo! made headlines recently when it resurrected Community for a fabled sixth season, a major feather in its fledgling VOD cap. Sony, meanwhile, has greenlit a PlayStation TV series called Powers, a fantasy crime noir to be broadcast exclusively on the PlayStation Network.

Microsoft was in the race too, with its own slate of
six greenlit shows and another 11 in development. Now, though, most of them have been show the red light.

New CEO Satya Nadella emphasises that the company’s renewed focus is on cloud computing, technology and mobile devices rather than television production. With Netflix reportedly paying something like $1.5 million per episode for not-yet-produced James Patterson drama Zoo, will any of the other companies diversifying into their territory reach a similar decision?

For Microsoft, it is a very specific, calculated move. Announced at the end of last week, it follows the costly acquisition of failing mobile phone company Nokia. The company will slash up to 18,000 jobs this year – 14 per cent of its workforce and the biggest wave of redundancies in its history.
While the bulk of the cuts will be targeted at employees working for Nokia, though, Microsoft is equally keen to trim down its expensive content arm.

The previous team, who had first launched Xbox Entertainment Studios, were perhaps weakened last year when Head of Xbox Don Mattrick left – as Variety notes, Mattrick had ties to Hollywood players such as Jeffrey Katzenberg and Steven Spielberg. Indeed, Spielberg’s on board for a Halo series that Xbox will still produce – and, it seems, may well end up shared with Showtime. Human with UK broadcast Channel 4 and Kudos about robot servants – and other licensed content deals – are expected to still be made.

But rather than push forward an original content-driven media strategy, some of these projects will more likely be used as ways to fuel existing game products; Halo: Nightfall, for example, a live-action prequel exec produced by Ridley Scott, is all about introducing a new character for the next game in the franchise.

“Xbox will continue to support and deliver interactive sports content like ‘NFL on Xbox,’” Phil Spencer, Head of Microsoft Studios, said in a statement. “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.”

“Change is never easy,” he added, “but I believe the changes announced today help us better align with our long-term goals.”

Content’s great, the company seems to have decided, but they need to sell systems to play it on first. And with Netflix, iPlayer, Amazon and other VOD apps all on the Xbox One and Xbox 360 – now without a subscription membership – is there enough original content to go around already?

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