Hi-Fi Rush developer was reportedly "in the process of pitching a sequel" when Xbox shut it down

Hi-Fi Rush developer Tango Gameworks was set to pitch a sequel to its acclaimed rhythm action game when Microsoft shut the studio down, according to a new report.

That information comes from Bloomberg reporter Jason Schreier, citing people familiar with Xbox's plans. Schreier writes that the studio closures "included Tokyo-based Tango Gameworks, which last year released the critically acclaimed action game Hi-Fi Rush. Tango was in the process of pitching a sequel, said the people, who asked not to be identified discussing nonpublic information."

The report additionally alleges that "Arkane had been looking to return to its roots by pitching a new single-player 'immersive sim' game, such as a new entry in the Dishonored series." It's unclear whether that pitch would've come specifically from the now-defunct Arkane Austin, its sister studio Arkane Lyon, or some combination of the two.

On Twitter, Schreier notes that "the suggestion was that rather than consolidate by canceling games already in production, ZeniMax chose to shut down the two studios with projects that weren't yet greenlit and faced long, expensive roads. (Among other factors!)"

Other cuts at Xbox are also coming, according to the report, though there are no details on where those layoffs or shutdowns might happen. The report describes the closures of Tango, Arkane Austin, and others this week as "the result of a widespread cost-cutting initiative that still isn’t finished." A few months ago - well before these studio closures - Xbox laid off nearly 2,000 employees.

After a year of Xbox execs celebrating Hi-Fi Rush as a "break out hit" and saying "we don't quit" on games like Redfall, everyone wants to know what changed.