According to this article from Jason Schreier, the reason is actually more cynical and awful than I thought, but in a different way. It actually has nothing at all to do with the specific studios or their recent output.
Basically, it goes like this:
- Microsoft gets a lot of press and legal heat around the acquisition of Activision-Blizzard last year
- This brings more scrutiny to the games division from the Microsoft higher ups ("what the heck are they up to over there, spending all this money, drawing so much attention?")
- The executives of the games division feel the need to Do Something™ to assuage doubts about the viability of their strategy and keep their jobs/autonomy
- So, who is asking for money in games right now?
- Oh, it's these two studios who are trying to spin up new projects
- Let's just shut 'em down instead, that should satisfy our bosses
- Now it looks like we're running a nice, lean operation!
So we get hundreds out of work, and Microsoft can continue its bad "netflix of games" strategy that isn't even working. Everything else is just a lame excuse.
Just pure corporate politicking. Nothing more, nothing less.
Lmao I got "made redundant" from a previous role due to the same bullshit.
One arm of that company heard we were just prototyping and "not bringing in money so what the fuck are they doing?" And demanded they made cuts to bring the costs down.
Naturally they cut the audio and QA departments because who needs those really?
I also had to guide the company director through the redundancy process as they had to try and bring the then new HR person in a week early to try deal with that. It was very hard for him, who occasionally called in from one of his 3 homes in the most expensive cities in the world!