Microsoft has never been good at running game studios, which is a problem when it owns them all

Microsoft just slashed hundreds of gaming jobs and pulled the plug on headline projects like Rare’s Everwild and The Initiative’s Perfect Dark, part of its fourth round of Xbox layoffs since last year. Cuts also hit Blizzard, Raven Software, Turn 10, King and others, underscoring the messy aftermath of Microsoft’s five-year buying binge—Bethesda, Activision Blizzard and dozens of studios—that ballooned Xbox into the world’s largest publisher but couldn’t keep all those teams humming.

Behind the numbers lies a longer tale: decades of Microsoft mismanaging its studios, from bungled Halo sequels at Bungie and 343 Industries to the rise-and-fall of Lionhead and the identity crisis at Rare. Overcorrecting every leadership hunch—retreating from first-party then overbuying—has left Xbox bloated with big-IP worries and little creative freedom. With next year’s Fable reboot looming, Microsoft’s real challenge is learning to nurture its studios rather than stifle them—or risk more cancellations and layoffs ahead.