Microsoft has laid off thousands of workers across its various divisions in the latest cost-cutting measures taken by the corporation, whose 2024 revenue exceeded $245 billion, a 16-percent increase over its 2023 revenue. Though the cuts are impacted several of the company’s various divisions, Xbox appears to be hit particularly hard. This represents the fourth time in 18 months that Microsoft Gaming has laid off workers.
“We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” an Xbox spokesperson said in an official comment provided to Game Informer. Alongside the official statement, Xbox PR confirmed that less than 4 percent of Microsoft’s global workforce was impacted. However, according to Microsoft’s official reporting, the company employs 228,000 people worldwide, which means 4 percent of the global workforce accounts for more than 9,100 people. Xbox PR also confirmed to Game Informer that the gaming division is impacted, “but not the majority,” and stopped short of providing any additional details. When I requested a percentage of Xbox-specific impact, PR could not provide additional context.
However, Variety and several other outlets obtained a memo to Xbox employees from Microsoft Gaming CEO Phil Spencer. Notably, Spencer says, “Our platform, hardware, and game roadmap have never looked stronger,” and “Simply put, we would not be where we are without the time, energy, and creativity of those whose roles are impacted.” You can see that in its entirety below.
Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.
I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.
Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.
HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.
Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.
Phil
Subsequently, The Verge acquired a memo sent by Xbox president of game content and studios, Matt Booty. In his memo, Booty confirms Xbox is closing down The Initiative, an all-new first-party studio founded by Xbox in 2018 in Santa Monica, California. In 2020, The Initiative revealed it was working on a new entry in the Perfect Dark franchise, which is now canceled as a result of this closure. Booty also confirms the Twycross, England-based Rare, which Xbox acquired in 2002 and has worked on titles like Sea of Thieves and Viva Piñata, has been impacted by this round of layoffs, and its new IP, Everwild, which was announced in 2019, has also been canceled. You can read his full memo below.
Following Phil’s note, I want to share more about the changes to the Studios business units.
We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.
Our overall portfolio strategy is unchanged: build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026.
For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.
To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we’re taking on the path ahead.
Matt
According to Bloomberg, Candy Crush developer King, which Xbox acquired in 2023 as part of the blockbuster $68.7 billion Activision Blizzard King deal, is cutting 10 percent of its staff, which amounts to around 200 jobs, and ZeniMax, which Xbox acquired in 2021 as part of its $7.5 billion acquisition of Bethesda, suffered losses. According to that same report, a new MMORPG that was in development at ZeniMax Online Studios, has also been canceled. Meanwhile, Bloomberg also reports Raven Software, which was acquired as part of the Activision Blizzard King purchase and has worked extensively on recent Call of Duty titles, is also impacted. The Verge also reports that Forza Motorsport developer Turn 10 Studios is also heavily impacted by these cuts, with more than 70 people reportedly laid off.
Microsoft has laid off thousands upon thousands of workers over the last 18 months, including 1,900 employees in January 2024. In May 2024, Xbox closed Arkane Austin, Tango Gameworks, and Alpha Dog Games, and laid off several employees at ZeniMax, all of which were acquired alongside Bethesda in 2021.
Our sincerest well wishes go out to all those impacted by the latest round of cuts.
