Times Colonist the decision was made to "centralize development" in its Vancouver studios.
"This was not an easy decision, but one guided by our desire to centralize development in our Vancouver studios. We are working closely with all employees affected by this change to identify open positions in other studios, and we remain committed to doing business in British Columbia." Microsoft's Vancouver studio, Black Tusk, is currently working on the next "big" Micosoft game.
The formation of the Victoria, BC office was part of a $1 billion investment in Xbox One. This initiative saw Microsoft forming multiple studios across the globe – London, Victoria and Washington – and securing 15 exclusives for the Xbox One's first year of existence.
In a statement to Polygon, Microsoft said the studio's closure would not cause the cancellation of any projects the studio was working on, whatever they may be. "We did not cancel any projects rather we centralized our development efforts in BC to our Vancouver offices."