What started as another one of those rumors within the span of a day became a confirmed truth: following the release of the upcoming Halo Wars RTS game for the Xbox 360 console, Ensemble Studios, known for the Age of Empires RTS series of games for Windows, will be shuttered. A new studio, like Ensemble part of Microsoft Games Studios, will be formed to support Halo Wars. Employees releated to Halo Wars will be offered spots in the new studio; those currently working on the project have been offered extra incentives to continue working on it through release. Those not directly related to Halo Wars are being let go.

This is being called a "fiscal move" designed to "grow" the company's game efforts.

This is a strange move on many levels, and deserves examination in a wider context.

If the staff working on projects unrelated to Halo Wars formed a significant portion of the studio's payroll, then removing them would indeed make the studio less expensive. However, paying incentives to keep the Halo Wars staff makes them more expensive than they are currently, and also negatively impacts morale. So unless those employees were more numerous or more expensive, those gains are long-term and not short term; and that assumes that they were not working on projects that were going to generate revenue, since that potential revenue is now lost.

The timing of the news is also interesting. There's never a good time for someone to hear that they've been fired or laid off, but the gaming press has covered several studio shutterings that occurred right after a game's release; perhaps Microsoft considered that announcing the closure nearer to Halo Wars' actual release date might negatively impact the game's sales, and so elected to do it earlier. Once people have been given their pink slips they can hardly be expected to keep entirely silent, especially with friends in the industry, so there was no way to keep the closure secret for any length of time; hence the quick confirmation.

I've seen several posters on various message boards wonder aloud why Microsoft didn't just buy Ensemble. That's just it. Microsoft didn't have to buy Ensemble. They already owned them. Microsoft's high profile studio acquisitions now have a decidedly checkered history. FASA stumbled and was shuttered. Rare tried to make a shooter to appeal to the Xbox demographic and missed the mark, even though it had the field at launch nearly to itself. Their other title, Kameo, was more in line with titles from their Nintendo days, but also received a mixed reaction. Viva Pinata looks like their strongest Xbox 360 title, but it also sits in a niche by itself amongst sports games and shooters.

Then there's Bungie; the unexpected blockbuster that spawned a hit trilogy and a staggering array of related merchandise, propelling the studio from its position as a critically acclaimed Macintosh developer with occasional financial problems to a mass market juggernaut.

Then they walked out the door, leaving Microsoft with the franchise and industry watchers scratching their heads. The goose who laid the golden egg left one last present, left the farm to hang out its own shingle, and prompty announced it would keep supporting and enhancing the eggs, but that new and as-yet-unannounced golden items would be coming in the future. This kind of thing doesn't happen every day.

This might have convinced Microsoft that the way to continue to build its Xbox empire isn't to acquire good independent developers, treat them nicely, let them keep their own corporate culture, and let them do their own thing, because ultimately when you do that, if they're successful enough they'll just leave. If they keep making games for your platform that's good, but suddenly you're getting only the publisher's take instead of the whole enchilada; and ultimately that independent studio might decide to develop for other platforms, and you've lost exclusivity with your premier developer. In short it makes the entire experience with Bungie look much like what I thought it was at the start: not the acqusition of a studio but the acquisition of the Halo property. Despite all the hot air about Bungie's talent and innovation, what Microsoft wanted, and what they ultimately got and had to keep-- and ended up acquiring on the cheap compared to developers like Lionhead-- was Halo.

Now Ensemble Studios is feeling the repercussions of Bungie's independence. The independent identity of the studio Microsoft bought, Ensemble, is being destroyed, to be replaced by a Halo Wars-focused division of MGS that will help monetize the property that Microsoft was able to rescue from the Bungie departure. It is largely a symbolic move; those people worked for Microsoft before and they still will. What is being removed is the idea of that group as something separate from Microsoft; the knowledge of their history before Microsoft, and the kernel of the idea that just as there was life before Microsoft, there might be life after Microsoft. When the studio is a group just part of a larger team, with a name assigned to them that bears no relation to the studio Microsoft purchased, the risk of those people going independent is minimized.

UPDATE: The above was written before I saw notes at Kotaku that indicate that while MS retains ownership of Halo and of Age of Empires, the new studio that is replacing Ensemble will, in fact, be independent of Microsoft, as Bungie is. This ends up painting a picture in which rather than trying to prevent further defections from MGS, what it in fact is doing is divesting itself of game development and becoming more of a pure publisher-- letting independent companies bear the costs of financing and developing the games.

In the end, the real casualties seem to be Ensemble's PC developers. With Starcraft 2 looming in the future of RTS games for Windows and Microsoft focused squarely on building and expanding the Halo property and continuing to add genres to the Xbox 360's repertoire, there was no room for Age of Empires. No room for the idea of Ensemble Studios, a group that used to make its own decisions and might again someday.

I wonder what is going through Peter Molyneux's mind right about now?