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It’s now confirmed that Microsoft is laying off moreXboxstaff as part of wider cuts at Microsoft. The company has experienced multiple rounds of layoffs over the past two years, beginning in January 2024 and mostly affecting employees at Activision-Blizzard studios. That May, a second round of layoffs saw the closure of four studios: Arkane Austin, Tango Gameworks, Alpha Dogs, and Roundhouse Games, the latter of which was absorbed into ZeniMax. Finally, more layoffs hit the Activision-Blizzard sector in September.
According toGamespot(viaVariety), in this fourth round of layoffs,Microsoft is cutting under 4% of its workers worldwide - likely about 9,000 people. Most of the Xbox cuts appear to be focused on King, the developer of Candy Crush, whichMicrosoft acquired in a landmark dealin 2023 (viaBloomberg). Further layoffs are also expected at ZeniMax, best known for its work onThe Elder ScrollsandFallout. Strangely, this comes after a profitable few months for Microsoft, which reported net profits of $25.8 billion last quarter.
In an official statement shared withScreen Rantand other outlets, a Microsoft spokesperson said, “We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace.”
Who’s Affected By The Most Recent Xbox Layoffs
& Phil Spencer Responds
Ultimately, it seems likethe Xbox layoffs are only a small part of Microsoft’s wider cost-cutting program. 10% of the staff at mobile game developer King, a Swedish-British game developer best known forCandy Crush. King is cutting 10% of its staff (perBloomberg) to the tune of 200 people, and, while ZeniMax employees have been warned of impending job cuts, none appear to have taken place just yet.
This comes at a fairly profitable time for Microsoft, which, besides its net revenue of $25.8 billion this past quarter, has also seen its stock price rise by 150% in the past five years. In addition, Xbox alone has shown consistent year-over-year revenue growth - but recent comments by Microsoft Gaming CEO Phil Spencer may reveal the motivation behind this decision.
Phil Spencer Responds To Xbox Layoffs
A “Focused Approach”
After an earlier round of layoffs, Spencer commented on the need to continuously grow Xbox’s business - if not by increasing revenue, then by cutting costs - as a driving force behind the need for layoffs. He toldPolygon, “You get a lot of publicly traded companies that are in the industry that have to show their investors growth…the side of the business that then gets scrutinized is the cost side. Because if you’re not going to grow the revenue side, then the cost side becomes challenged.”
Defending the most recent round of layoffs,Spencer cited a need to focus Microsoft’s effortsin an internal memo to Microsoft employees: “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.”
Between its recent hardware and exclusivity decisions, and the latest round of layoffs, the future is unclear for Microsoft’s gaming division. Although continuous profits suggest it’s not really going anywhere, it’s clearly changing its approach, having gone from rapid expansion to extensive staff cuts. While theXboxbrand will almost certainly be around for a while, it’s hard to say just what it’ll look like in the next generation.
UPDATE: 2025-06-18 11:26 EST BY BEN BROSOFSKY
Clarification On Xbox
This article has been updated to remove a potentially inaccurate description of Xbox’s hardware plans and add Microsoft’s official statement on the layoffs.
