Microsoft has confirmed the news in a statement issued to GamesIndustry.biz.
"As we continue to fulfil our long-term vision to create new, fun, social and interactive entertainment experiences for our fans, we have made the decision to merge Soho Productions and Lift London into one team," said a Microsoft spokesperson. "With such an incredibly talented group of people working together in one place, these changes will allow for more effective collaboration on new games and consumer experiences. Microsoft Studios continues to grow as an overall organization as we focus and invest in key priority areas that will drive future profitable growth."
GamesIndustry.biz has spoken to AJ Grand-Scrutton, head of Dlala Studios, about the rumours of Lift's merger with Soho Productions.
"If the closure is happening it's a real shame and also...it's really hard to say," said Scrutton when asked what he thought may have brought about the merger. "Even after being on the inside for a year it's still hard, but at the same time it's been over 2 years now and there's no product out in the world...which wouldn't be a problem if it was a full console launch, but when it's a studio focussed on quick turnaround mobile/tablet releases, two years feels like a really long time to not move even into soft-launch.
"The thing is, there are some fantastic people there, the guys at the top top like the two Phil's, The Schune and then the guys in the trenches are amazing. The quality of artists and devs there is ridiculous so it could just be a great example of super talented individuals without the right middle steps doesn't equal success."
So does this leave a gap in the UK's development scene? Is it a wavering in Microsoft's commitment to UK indies? Scrutton thinks not. "I think it could go either way," he tells GamesIndustry.biz. "Shutting down an internal studio doesn't necessarily mean negatives for MS's approach to indie, in fact it could go the opposite way and show a dedication to external teams rather than internal. Which I don't think would be a bad thing at all.
"Being brutally honest I'm not sure it does [leave a gap]. I don't think Lift was filling a gap themselves as I think they were still searching for what that gap is. I do think it should send a message to people though that big backing and money doesn't always equal success so keep focussed on your goals."
All the same, Scrutton says his team's time at Lift was invaluable. "It was beyond useful. I know I've said stuff and done talks which speak about the negatives and positives, but that can't detract from the fact that the positives were big. We learned more about running a studio and being a team in a year there then we would 3 years out of there. We also learned about what processes work for us and don't work for us and negotiating the world of a major studio."
Microsoft's Lift London studio, formed of over 60 people, has suffered several redundancies and will be merged with Microsoft's Soho Productions team, GamesIndustry.biz has been told, although how many have been made redundant remains uncertain. The information comes from several sources, but Microsoft has refused to comment on the situation.
Soho Productions deals with TV and other media rather than games and is best known for Kinect Sesame Street TV. GamesIndustry.biz understands that the merger is an ongoing process, with a rebranding and further redundancies expected to be coming once the process is complete. It's also thought that he resulting team will be "moving away from games", taking its lead from Soho rather than Lift itself. It's not known whether redundant staff will be relocated elsewhere within Microsoft or not.
Lift is headed up by ex-Rare veteran Lee Schuneman, and the studio's founding was directly overseen by Phil Harrison. Established as an incubator: a place for fledgling studios to take office space and be mentored whilst working on projects for Microsoft, Lift was originally intended to focus on the tablet market to support Surface, but later expanded its remit to include a wider range of projects. Indie studio Dlala was the first to take a residency, releasing Janksy for Windows 8 in late 2012, and remains the project's most celebrated alumnus.
"The studio's mission is to be bold and brave and to lift the reach of the Xbox service beyond the console," said Schuneman when Lift was announced. "If you look at the size of the tablet market today, it's measured in the hundreds of millions, and that's the area where we aspire to be."
Microsoft and Lift have been contacted for further comment, but declined to clarify the situation.