Microsoft plans to cut approximately 3,200 jobs from its Xbox division over the next year as part of broader layoffs affecting 4,800 positions across the company. The layoffs represent around 2.1% of Microsoft’s global workforce, with 1,600 job cuts effective immediately.
The job reductions include 350 employees from four studios Xbox is divesting. Compulsion Games and Double Fine Productions will transition to independent status, retaining their intellectual property and upcoming game projects, according to Xbox CEO Asha Sharma. Ninja Theory and Undead Labs will also join new ownership with necessary funding for future projects.
Sharma stated that Arkane Studios is reviewing its options due to French labor laws, while confirming that no first-party games or projects announced by Xbox will be canceled. Mojang and King will now report directly to Sharma as part of a restructuring effort aimed at improving management efficiency. Sharma emphasized that Xbox’s revenue margins are 3-10 times lower than comparable firms, necessitating significant changes.
Xbox has faced internal financial inefficiencies, with losses of 64 cents for every dollar invested, according to Sharma. She noted that the company has expanded its studio portfolio aggressively since 2018 but is now competing with more independent studios. To adapt, Xbox will focus on higher priority projects while simplifying its organizational structure.
As part of the reorganization, Dave McCarthy, the division’s chief operating officer, is retiring, with Helen Chiang appointed as his successor. Sharma stated that the new COO will oversee a unified operating model to foster accountability and clear investment decisions.
The layoffs follow Microsoft’s recent announcement of price increases for Xbox consoles due to rising costs. The Communications Workers of America union urged the company to negotiate meaningful layoff protections for affected employees.
Sharma clarified the need for these layoffs, pointing to a severe hardware crisis in the gaming industry and emphasizing the necessity of a reset within Xbox to ensure future growth. The restructuring plan aligns with previous layoffs within the company, including cuts in early 2024 and additional layoffs over the past year.
