Microsoft is shutting four studios, including Tango Gameworks, the developers of Bafta award-winning Hi-Fi Rush.
The Tokyo studio is being closed alongside Texas-based Arkane Austin and Canadian developer Alpha Dog Studios.
Wisconsin-based Roundhouse Games will be absorbed into Elder Scrolls Online developer ZeniMax Online Studios.
Microsoft has not said how many jobs will be cut as a result of the closures, which are all being made at subsidiary Bethesda - which the tech giant bought for $7.5bn (then £5.85bn) in 2020.
"I just want to say that I love all the people at Arkane Austin so much," said studio head Harvey Smith in a post on X.
"Great times, hard times, we went through so much, together."
Head of Xbox Games Studios Matt Booty announced the news in an email to staff, seen by the BBC.
He said the move meant it was ending development on Arkane Austin game Redfall, with "some members of the team" joining other studios.
The company plans to “provide make-good offers” to players who had pre-ordered downloadable content for the game that will now never see the light of day.
“These changes are grounded in prioritising high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades,” he wrote.
He said there would also be "a small number of roles" cut across Bethesda's publishing and corporate teams.
'A gut stab'
Hi-Fi Rush was much admired by critics when it was released in 2023 - the game went on to win several end-of-year awards for its animation and sound design.
But alarm bells began ringing at Tango Gameworks after it was among the four games Microsoft released on rival consoles this year.
Its founder, Shinji Mikami, had already left to start his own rival studio.
The closure of Tango Gameworks means an end to the studio responsible for several popular games, including The Evil Within and Ghostwire: Tokyo.
In a short post on X, formerly Twitter, the developer thanked its fans.
"Thank you to everyone who explored the worlds we created," it said.
The move has been met with criticism from gamers as well as those within the company, with Dinga Bakaba, the studio head of Arkane Austin sister studio Arkane Lyon, calling the cuts "absolutely terrible".
"Permission to be human: to any executive reading this, friendly reminder that video games are an entertainment/cultural industry, and your business as a corporation is to take care of your artists/entertainers and help them create value for you," he wrote on X.
"For now, great teams are sunsetting before our eyes again, and it's a gut stab."
It is the latest string of cuts to come in an industry that has already seen tens of thousands of jobs lost, with Bethesda itself already facing cuts announced in January 2024.
At that point, Microsoft had around 22,000 people working in its gaming division.
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2024-05-08 02:35:35Z
CBMiLmh0dHBzOi8vd3d3LmJiYy5jb20vbmV3cy9hcnRpY2xlcy9jNzJwNWVwemoybm_SATJodHRwczovL3d3dy5iYmMuY29tL25ld3MvYXJ0aWNsZXMvYzcycDVlcHpqMm5vLmFtcA
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