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Microsoft Catches Ire From Advertisers Over Xbox Entertainment Studios Shutdown
There's been some recent shakeups going on at Microsoft that has caused the major enterprise software company and video game manufacturer to take drastic cuts to their business operations. It was recently reported that Microsoft axed 18,000 jobs from their total pool of more than 127,000 employees from their worldwide offices. Part of those cuts came from the closure of a division in the Xbox brand, the Xbox Entertainment Studios.
While the large majority of the 18,000 cuts came from the Nokia division, which saw 12,500 people let go from the company, only 200 individuals were let go from the Xbox Entertainment Studios subsidiary. With the closure stamped by the new CEO of Microsoft, Satya Nadella, there came a torrent of ire from advertisers over the shuttering of the Xbox Entertainment Studios.
According to the Wall Street Journal, advertisers are not happy about the closure due to the fact that the shutdown happened only three months after the XBES pitched deals to major media advertisers, in an attempt to help build interest around planned scripted and documentary shows.
Two of the shows that were already in production will continue as planned, including “Signal to Noise” and the Halo television series that will premiere on Showtime. The other shows that were in pre-production or early concept phases aiming to secure ad deals have been scrapped, sending a wave of fury through the advertiser marketplace.
According to Windows Phone Central, Vik Kathuria, the Global Chief Media Officer at Razorfish had some unkind words to share about the ordeal, saying that...
"It's insane given that's where the media business is headed…with one end focusing on programmatic and the other on original high-end content. Confidence will be hard to earn back after this."
The marketplace is stiff, however, as the programming end is occupied by the likes of Amazon's new Fire TV, Netflix, Hulu and other streaming distribution services and devices. Microsoft was coming into a market with a $500 console that they would have to try to get casual consumers to pick up in order to make exclusive Xbox media features a viable resource for original “high-end” content.
Some believe that if Microsoft had stuck to their guns and maintained the Xbox Entertainment Studios, they could have produced enough shows that garnered buzz from other major digital distribution services, ultimately allowing Microsoft to market their content to other media providers and expand their market breadth.
However, the above scenario was all depicted under the assumption that the original programming content that would come from out of the Xbox Entertainment Studios would be a success. As it stands, there's no way to know how well the content will be received by the core audience or the general public at large.
If Halo: Nightfall and the Halo TV series turn out to be a striking success then it's always possible that Satya could return to the division and see whether or not it's worth re-opening and pursuing as a long term goal.
For now, the new CEO is trimming the fat where needed and keeping the company running lean and in a focused direction.
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