Game Studio Flight From Microsoft A Sign of Troubles?

Newsweek's LevelUp blog continues to produce some highly interesting material. Today they have up a look at the 'flight' of game studios from Microsoft's corporate umbrella. BioWare's purchase by EA distances it a bit from their cosy relationship with Microsoft, as does Bizarre's purchase by Activision. Bungie's departure from the company itself goes without saying. So what does all this mean? Is this a sign of troubles in Redmond, or just more fallout from the huge undertaking required to get the Xbox 360 to the position it has today? "For us, the flight of the Killer B's is a clear indication that Microsoft as a whole is still shell shocked not only by the massive losses in the Xbox division, but also more importantly by the poor showing of Rare, which has to rank as not only one of the Microsoft's least successful purchases, but as quite possibly the worst acquisition in the history of gaming. Microsoft paid $375 million in cash for Rare, and based on the modest revenues from its ensuing titles--a Conker's Bad Fur Day remake, Grabbed by the Ghoulies, Kameo, Perfect Dark Zero and Viva Pinata--all they've got to show for it is that proverbial lousy T-shirt, completely stained with red ink."

Re:Bioware? Bizarre?

[gorbachev]

Both companies had an exclusive publishing agreement with Microsoft Game Studios and were developing games only for the XBox and Xbox 360 platform.

Both companies will now be able to develop for other platforms as well.

Re:Bioware? Bizarre?

[powerlord]

You're right, it might be over-analyzing the trend (based on the number of points). It does look at an overlooked part of the picture though.

Nintendo has lots of development companies inhouse and exlusive ( http://en.wikipedia.org/wiki/List_of_Nintendo_developers [wikipedia.org] ).

Even Sony has been pretty consistent about maintaining worldwide developer studios ( http://en.wikipedia.org/wiki/Sony_Computer_Entertainment#Internal_organization [wikipedia.org] ). Leaving aside studios like Insomniac Games (Resistance:Fall of Man, Ratchet & Clank Series) who have "Close ties" to the studio.

MicroSoft has a much smaller stable of inhouse (and related) development companies ( http://en.wikipedia.org/wiki/Microsoft_Games#In-house_studios [wikipedia.org] ). They also have the split focus of providing games for the XBox 360, and providing games for Vista (though this is not mentioned). Any decrease in the inhouse development obviously puts more reliance on outside development, and as more and more games (especially from developers like EA) go cross-platform, its those in-house developers that help provide differentiation between competing products (all else being equal).

Re:Xbox Losing Money?

[king-manic]

Last I heard MS was already making a profit on the 360, due to the cost coming down quicker than expected. Yes they took that billion dollar charge, but as I understand it each one sold is still profit at this point.

You heard wrong. The billion dollar allocation for RRD problems with the existing retail models pushed their possibility of profitability into 2008. Each machine is sold at a profit but the division itself is still in the red due to warranty issues. If you factor in the extended RR of D warrant it wipes out any profit on their machines and then some.