Gamertell

When word of massive layoffs at Microsoft broke, the question of what impact the entertainment division would suffer hadn’t been answered. Now we’re learning those answers and the news isn’t good.

VentureBeat confirms that Microsoft’s game studios were hit hard. The studio ACES, known for Microsoft’s long-running Flight Simulator series, got shut down. That team was working on Microsoft Train Simulator as well. Apparently 30 percent of the company’s game testers got laid off and VentureBeat’s also hearing rumors there could be a shakeup in game division management.

Microsoft’s Entertainment and Devices Division has been making adjustments for several months. Ensemble Studios, an acclaimed maker of real-time strategy games, is closing its doors right after shipping Halo Wars. Microsoft allowed Bungie, the creators of Halo, to spin off. That means that the studio responsible for Microsoft’s biggest hit is free to make games for Sony or Nintendo.

Making it through unscathed (for now) are Fable maker Lionhead Studios, Rare and the studio that makes Forza Motorsport. Microsoft’s Gamerscore blog was another casualty, with several members confirming via Twitter that they have been laid off.

VentureBeat’s Dean Takahashi has been following the troubles in Xbox-land for quite a while and did one of the most extensive reports anyone has seen on the infamous “Red Ring of Death” console failures. The veteran writer said his findings show Microsoft knew there were problems with the console but rushed it out anyway, believing it was important to be the first next-generation console to market. On July 5, 2007, Microsoft announced an aggressive warranty program that has cost it an estimated $1.15 billion. That’s a huge cost rivals Nintendo and Sony haven’t had to deal with.

Read [VentureBeat] Also Read [GameDaily]