Skip to main content

Lionhead shutdown shines a light on Microsoft Studios

First-party development for Xbox One has slowed to a trickle; does Microsoft's third-party focus see Xbox as part of the Windows 10 ecosystem?

Microsoft's decision to shut down Lionhead is sad news for the studio's staff, and a blow both to British development in general and to the vibrant game development scene around the southern town of Guildford in particular. As one of several studios created by key figures from the legendary Bullfrog Entertainment, Lionhead has been a pillar of the UK games industry for almost 20 years - and its fate, sadly, has mirrored that of its predecessor to an unfortunate degree. Bullfrog was acquired by EA, saw its staff, resources and franchises mismanaged and was ultimately shut down; Lionhead's experience since being acquired by Microsoft has been grimly similar. With the end of the studio comes the effective end of the Fable franchise, which in recent years had been reduced to an ill-considered Kinect game and the now-cancelled free-to-play co-op RPG Fable Legends.

A clue to the thinking at Microsoft Studios comes from the fact that Lionhead isn't the only studio facing the end of the line this week. Danish team Press Play Studios is also being shuttered, and just like Lionhead, it's a studio shutdown accompanied by the outright cancellation of the project it was working on, a third-person survival title codenamed Project Knoxville. The shutting of Lionhead and Press Play represents a huge loss to Microsoft Studios' European development capacity; what remains is British studio Rare, which is working on Xbox One and Windows title Sea of Thieves, Minecraft creators Mojang in Sweden, and Lift London, which is thought to be working on tablet and mobile titles (its website hints at Hololens concepts as well).

"Fable Legends made it all the way through years of development to a fairly fully-featured beta before being cancelled, which suggests a failure of management on Microsoft's part"

The closures also remove two major titles from the Xbox One's release schedule - Fable Legends and Project Knoxville - though it's fair to assume that the closures themselves wouldn't have come about if Microsoft Studios management still had confidence in those titles. Projects being cancelled for not being up to scratch isn't anything new or noteworthy in the games business; it's a natural part of the creative process that some things are attempted that don't work out. What is noteworthy is that Microsoft Studios seemingly failed to address those problems earlier in development - Fable Legends made it all the way through years of development to a fairly fully-featured beta before being cancelled, which suggests a failure of management on Microsoft's part - and that the company's approach to the cancellations has been to shutter both of the studios involved, instead of moving them on to new projects. If it were one studio, you could argue that there were specific problems which had caused Microsoft Studios to lose faith in it overall; shuttering two studios in one week feels more like a policy decision.

As a consequence, the closure of Lionhead and Press Play casts a bright light on the broader status of Microsoft Studios' current policies and line-up. On the European side, the company has one confirmed Xbox One game in development at a first-party studio - Rare's Sea of Thieves. On the other side of the Atlantic, Microsoft Studios' efforts primarily focus around 343 Industries, which has inherited the Halo franchise from Bungie, Forza studio Turn 10, and The Coalition (formerly Black Tusk), which has been handed the Gears of War IP that Microsoft bought from Epic Games.

Of course these aren't the only Xbox One exclusives in development - Microsoft also has relationships with third-parties ranging from European teams Remedy (Quantum Break), Reagent Games (Crackdown 3) and Creative Assembly (Halo Wars 2) to Japan's Platinum Games (Scalebound) and Comcept (ReCore). Some of those relationships will yield Xbox One exclusive titles in 2016 while others are more long-term and unlikely to produce launches until 2017, but nonetheless, the point I'm making isn't that Xbox One is going to be bereft of exclusive games; rather, it's that Microsoft feels like it's fairly rapidly abandoning the first-party studio model as its means of securing those games.

"with Project Knoxville canned, the only original IP the company is putting its first-party weight behind is Rare's Sea of Thieves"

Just look at what's being developed in-house at Microsoft right now; with Project Knoxville canned, the only original IP the company is putting its first-party weight behind is Rare's Sea of Thieves. Turn 10, of course, are the originators of the Forza franchise and continue to work on it - but Microsoft's other studios are both in-house teams who have taken over work on a major Xbox franchise created by a different developer that has gone on to work on something else (Bungie in the case of Halo, Epic in the case of Gears of War). The Coalition's work on Gears of War has yet to take a public bow (with the exception of their somewhat bland reworking of the original game into HD last year) and may yet turn out to be excellent, but 343 Industries' most recent outing, Halo 5 Guardians, seems to have done little to halt the decline in the Halo series' popularity. It's a peculiarly anaemic and backwards-looking haul of games for a company in desperate need of big-hitting titles to turn attention back to Xbox One from the still-dominant PS4.

Instead, Microsoft is turning to third-party studios for those big hitters - either handing its IP to them (as in the case of Halo Wars 2 and Crackdown 3), or funding the development of original IP (Quantum Break, Scalebound, ReCore). This model is a core part of the approach of any platform holder - Sony also relies on third-party developers for many of its big titles, and even Nintendo cultivates relationships like this on a regular basis - but it's generally balanced against extremely active first-party in-house development for a variety of reasons, ranging from control (both creative and otherwise) and reliability to the value of keeping significant game development know-how in-house for the purposes of future hardware and software development. Nintendo is particularly noted for involving its in-house game developers in the process of designing new consoles, while the ease of development for Sony's PS4 is often attributed to greater consultation with the firm's in-house software teams than had occurred on the notoriously difficult PS3. The point is, other platform holders find significant value in keeping some high-profile development in-house, and often deliver their platform's biggest and most impressive exclusive titles through that route; Microsoft, though, is clearly moving towards a different path.

"a vision in which the Xbox brand and services are a games and media adjunct to Windows 10's ecosystem, and the Xbox hardware itself is a regularly updated low-cost Windows 10 platform designed as a games and media box for the living room"

This may well fit with the firm's new vision for Xbox' role in its product family, as hinted at by Phil Spencer a couple of weeks ago - a vision in which the Xbox brand and services are a games and media adjunct to Windows 10's ecosystem, and the Xbox hardware itself is a regularly updated low-cost Windows 10 platform designed as a games and media box for the living room. Platform, platform, platform; that's what Microsoft is all about, and where Xbox appears to be headed. Continuing to function as a publisher of high-profile system-selling software (for Windows 10 and Xbox, for as long as those continue to be separate things) might make sense; the ongoing cost and overhead of maintaining fully-funded in-house teams fits rather less comfortably with the model.

I maintain that this year will see Microsoft execute, or at least begin to execute, one of the most dramatic pivots the games industry has ever seen - shifting the Xbox division from what was essentially a copy of Sony's PlayStation business model to something entirely new and more aligned with the strengths and requirements of the Windows 10 business. Regardless of the success or failure of that pivot, I believe it to be a worthy and necessary effort, for the simple reason that I can't see Microsoft's senior management continuing to back Xbox if it doesn't mesh with the company's other businesses. What's clear from this week's studio closures, though, is that the pivot is going to be extremely painful for some parts of the business - particularly (and desperately unfairly to the staff impacted) those which are still executing on bad planning and management dating back to the Xbox One's original abortive vision. Lionhead in particular found itself a chew-toy for Microsoft Studios in recent years, wasted on a Kinect vanity title and then a poor-fitting F2P effort; now the studio and its staff are paying the price for that bungling, as the new, far more competent management of Xbox judges them unnecessary for the pivot to come. In a year or two's time, the Xbox / Windows 10 platform that emerges from these changes may well be a stronger, better environment for developers and consumers alike; that will be cold comfort for those in England and Denmark facing a job-hunt this week.

Read this next

Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.
Related topics