Microsoft has officially announced that Xbox Entertainment Studios will be shuttering its windows for good over the next few months. It’s not an entirely surprising move coming hot on the heels of Microsoft’s announced restructuring, which would eliminate 18,000 jobs. Gaming is the heart and soul and golden calf of Microsoft's operation. Xbox Entertainment Studios, while an ambitious concept, has also proved to be less than a moneymaker.
The company announced its plan to begin producing and streaming more and more ambitious content via its existing consoles in 2012 under the direction of Nancy Tellum, former President of CBS Entertainment. The idea was met with polite skepticism. Not long thereafter, managerial turnover -- including Tellum’s boss CEO Steve Ballmer heading out, followed quickly by the departure of Xbox’s own Don Mattrick -- thwarted the brand’s goal of eventually rivaling other streaming content giants. The challenge was issued, and now, two years later, Microsoft has given up the fight. The established players (Netflix, Hulu, Amazon, to name but a few) are to remain unchallenged when it comes to the original streaming content.
While Microsoft continues to dominate in the gaming arena, that wasn’t enough to immediately make success for Xbox Studios. Sure, it got the gaming community on lock. But that’s one corner of a much larger demographic needed to ensure the success of a viable TV enterprise, financially and creatively. From here on out, Microsoft plans on directing its focus to growing the markets it's already successful in -- hence the decision to sell a cheaper ($399) version of the Xbox One console without Kinect.
Where does that leave Tellum? From what Microsoft’s saying, in a kind of purgatory. She and her team are scheduled to stay on until productions currently in the works are completed. After that, who knows? Streaming content currently in development through the studio (such as the documentary series “Signal to Noise”) will still be available. The popular ‘Halo’ series inspired by the game and the more interactive ‘NFL by Xbox’ are still in play, but as for new productions, that’s a no-go. Phil Spencer, head of Microsoft studios, did say that content will still be available -- just through third party partnerships.
Microsoft's loss as a studio is not a great one to the world of online streaming content. But it does beg the question, how will the online community of studios change and grow in the years to come? If a goliath like Microsoft with all its resources can’t make a go of it without tripping and falling brutally, who can? Keeping our eyes on how old-school existing TV networks adapt and alter their offerings online could provide insight. Maybe network TV’s days aren’t numbered exactly the way we thought.
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