Reports that Gears of War: E-Day alone cost more than $500 million simplify a more complicated financial picture. Information attributed to Microsoft’s auditors places upwards of that amount against The Coalition across the development period covering Gears of War 5 and E-Day, rather than necessarily assigning the entire sum to the upcoming game.

Sources familiar with Microsoft’s plans say The Coalition has contributed to several other Xbox projects using Unreal Engine, including Avowed and State of Decay. The studio has also been responsible for tools and production pipelines created for Microsoft’s internal Unreal Engine technology, costs that may have been recorded against the studio rather than distributed among the teams using them.

The Coalition’s work extended beyond game production. The studio collaborated with Epic Games on the Matrix Awakens demonstration and the Alpha Point demo, which showcased Unreal Engine 5 on newer consoles and PCs. Techniques and tools created for those projects were later used across other first- and third-party products, according to the report.

The studio’s spending was also affected by a period of transition. Rod Fergusson left The Coalition in early 2020, and the studio entered a partially dormant phase while Microsoft considered its future. The COVID-19 pandemic further disrupted development processes built around office-based work.

During that period, The Coalition reportedly spent more than a year and a half on an Xbox prototype that was eventually canceled. It also contributed to Avowed, Hellblade 2, Clockwork Revolution, State of Decay 3, Grounded, Grounded 2 and an upcoming StarCraft reboot. Mike Crump was later established as studio head, after which development on E-Day became the team’s central focus.

The report describes broader uncertainty within Xbox over how work shared between studios, including contributions to Xbox Game Pass and other first-party projects, is reflected in individual budgets. That accounting ambiguity has fueled disagreement over how much of The Coalition’s total cost should be assigned to E-Day, shared technology or other projects.

Even if E-Day did not directly consume the entire $500 million figure, the amount represents a major investment at a time when AAA development in North America has become increasingly expensive. The game is also competing for players’ time and money against major releases, including Call of Duty: MW4, GTA 6 and WoW: Forever.

The reported budget has raised concerns that it could be used to support potential cuts affecting The Coalition. Microsoft has already announced thousands of layoffs across Xbox and indicated that further reductions could follow, although the report says there is no information confirming plans to close the studio.

The situation is particularly sensitive because Gears of War: E-Day is presented as Microsoft’s first major full Xbox exclusive in several years. The game reportedly received strong reviews, while the franchise is also connected to planned television and film projects. However, its performance and the costs attributed to The Coalition are being assessed within a wider restructuring of Xbox’s business.

Sources: Windows Central.