Microsoft Will Shut Down Xbox Entertainment Studios

Nancy Tellem will hang around to produce a couple of shows

Microsoft will close Xbox Entertainment Studios in the coming months, the technology giant said Thursday, the same day Microsoft announced it would lay off up to 18,000 workers. The Xbox remains a cornerstone of many living rooms, but Microsoft has decided producing TV of its own is harder and more expensive than it thought.

It would rather focus on gaming, the device’s original purpose.

Also read: Microsoft to Lay Off Up to 18,000 Employees

“Games are the single biggest digital life category in a mobile-first world, and Xbox is a strong consumer brand with an incredible fan base,” the company said in a statement.

“We will expect to close Xbox Entertainment Studios in the coming months.”

Microsoft created the entertainment studio in September 2012 and hired former CBS chief Nancy Tellem to run it. Tellem’s mandate was to create original shows that complement the movies and TV shows people already watched using their Xbox. Original shows would engender even more loyalty to the popular gaming platform, as original shows have endeared Netflix to its customers.

Despite Tellem’s pedigree and connections, she struggled to get shows off the ground, and the studio could not figure out a proper direction. Tellem and some of her team will hang around to produce a couple of their shows, including a show based on the “Halo” game, but the bulk of the studio’s 200 employees will be let go.

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The studio is a casualty of shifting priorities at Microsoft, which will eliminate 14 percent of its work force — the largest cuts in company history. Most of those reductions will come from the mobile division, which is a point of focus for CEO Satya Nadella. Nadella took command of the company  earlier this year from long-time CEO Steve Ballmer.

Nadella is trying to focus a company some felt was adrift under Ballmer, and TV production is not a part of that future.