Months after Xbot shut down lean teams, Microsoft reportedly forms a "smaller" studio to create AA games based on Blizzard IP

Microsoft and Activision are reportedly forming a new team under the Blizzard umbrella to work on smaller games based on its popular series.

Before absorbing the publisher in an arduous acquisition, Microsoft Gaming President Phil Spencer said he wanted to chat with Activision Blizzard about "what could happen" with the company's "back catalog" post-buyout. As soon as the deal was finally done and dusted, Spencer didn't spare a second to publicly joke about a dormant magical FPS' return: "When's Hexen coming back?"

Windows Central now reports that Microsoft is making good on its promises, and has approved the creation of a brand new team that mainly consists of many former King (Candy Crush) staff. Windows Central sources claim that the "smaller" studio is tasked with creating AA games in pre-existing Blizzard series - which might be anything from Overwatch and Warcraft spin-offs, to some form of Starcraft revival - because Microsoft is apparently "increasingly concerned about the monstrously ballooning [AAA] costs."

Balatro, Palworld, and Manor Lords, as well as Microsoft's own Grounded, have been heavyweight successes despite being made by relatively lean teams, meanwhile, blockbuster game budgets can now cost several hundreds of millions of dollars to make and still barely scrape even. 

Blizzard's new arm fits right into comments made by Xbox Game Studios boss Matt Booty, who said the company needed "smaller games that give us prestige and awards" - days after shutting down a Hi-Fi Rush makers Tango Gameworks and Prey engineers Arkane Austin, two teams that made relatively smaller, award-winning. Tango Gameworks did slot right in, according to Windows Central, but the richest company in the world apparently found "inter-studio collaboration logistically difficult."

Days after Bethesda Game Studios did the same thing, 500 World of Warcraft staff set up a massive “wall-to-wall” union.