That’s by design. Force your opposition to sell, bankrupt them and write off the loses. Shrink the industry and force players to sign up for your subscription services.
I’m not a fan, but it’s hard to see this wasn’t their plan from the get go
The industry historically hasn't shrunk when studios close like this. There just ends up being more bespoke studios all over the world with former developers from those studios.
What really gets me, and this touches on your comment, is that the execs said that they need to have the teams make what they specialize in. And then they turn around and force all the studios to make games that not at all anything they've ever made before.
The sad part is this might actually end up being a net positive in the long run. Their two biggest acquisitions were Bethesda and Activision-Blizzard, one company that has started their decline and another that is deep into it.
Microsoft pissing away $100B to buy these companies only to turn around and kill them 5-10 years later will end up breaking up the gaming conglomerates that have killed the western games industry. The only sad part is all the people that will lose their jobs and all the classic IP that will be squandered.