Amidst layoffs, Microsoft abandons bid to be the next Netflix

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Another contender for the Netflix crown has fallen.

On Thursday, Microsoft announced that the company will shut down its Xbox Entertainment Studios division, well before any of the studio’s marquee series go live. The news comes hours after Microsoft announced massive restructuring plans that will see the company eliminate up to 18,000 jobs this year.

In an internal memo published by Re/code, Phil Spencer, head of the company’s in-house video game production wing Microsoft Studios, briefly outlined Microsoft’s strategy for the Xbox in light of the sudden upheaval:

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…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.”

The memo echoes an email from Microsoft CEO Satya Nadella from last week that squarely defines gaming as the core of the company’s Xbox business.

It’s the latest in a long series of pivots away from the all-encompassing entertainment experience initially pitched when the console was revealed just over a year ago—moves brought about both by leadership changes and stiff competition from Sony’s Playstation 4.

Xbox Entertainment Studios was to be Microsoft’s bid towards making a splash in the original streaming video space. According to Spencer’s memo, Xbox Entertainment Studios executives Nancy Tellem and Jordan Levin will remain onboard to see all series currently in development through to completion—most notably a long-promised Halo television series.

Other entertainment services, like the console’s ‘NFL on Xbox’ service, will not be affected.


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