Several weeks ago Microsoft made a surprising announcement about the acquisition of several game studios. With these acquisitions the tech giant has effectively doubled its internal game development pipeline but there were indications that Microsoft was not done yet. Executives from the Xbox team hinted at future studio acquisitions and partnerships with established game development teams. Matt Booty – the Corporate Vice President of Microsoft Studios – has shed a little more light on what kind of studios Microsoft is keen to work with and it turns out that we should no be looking at industry giants such as Electronic Arts or Ubisoft but rather the mid-tier studios like Ninja Theory and Undead Labs.

Speaking with PC Games Insider, Booty said that Microsoft is very interested in assisting smaller studios express their creative visions in video games.

“While the industry is growing across the board, there seems to be fewer teams and studios focused on ‘mid-tier’ games that sit between triple-A blockbusters on one end and smaller indie games on the other,” said Booty. “Those are some of the kinds of studios that we’re interested in partnering with right now, studios with teams that can make quality, crafted games that sit just between mid-tier and triple-A and by becoming part of our Microsoft Studios family, can focus on craft and innovation and accelerate their creative growth.”

While AAA games remain a very important part of the video games industry, they also take a very long time to make. A development cycle of three to five years for a single game is becoming increasingly more common and those extended periods of time dramatically raise the cost of producing an AAA title.

Mid-tier game developers have smaller development teams and are able to produce content much more quickly – a quality that is extremely valuable to Microsoft because of Xbox Game Pass. A monthly subscription service requires a consistent stream of new content to keep users engaged.

It is not as if Microsoft has abandoned AAA game development. It still has several studios with large development teams such as 343 Industries, The Coalition, Turn 10 Studios, Rare Ltd. and the recently acquired Playground Games. They are also building an all new studio known as The Initiative – a team that some are touting as an AAAA developer to due to its budget.

However, the role of mid-tier developers who can produce high quality content more quickly is fast becoming a major battleground in the video games industry with giants such as Electronic Arts rushing to partner with these studios.

“We are the first to implement new technologies, the first to deliver content for new platforms, the first to explore new business models. It enables us to build a portfolio of exclusive games, and this was the right time to increase that investment”, said Booty.