Microsoft Reportedly Laying Off 650 Employees in Latest Round of Xbox Cuts

Microsoft is making headlines once again as it reportedly plans to lay off 650 employees from its Xbox division. This marks the company’s third round of unit cuts since its $69 billion acquisition of Activision Blizzard in October of last year.

The Details of the Layoffs

According to a memo from Xbox chief Phil Spencer, the affected employees are primarily those in corporate and supporting functions, rather than game development. Spencer emphasized that no games, devices, or experiences are being canceled, and no studios are being closed as part of these adjustments.

This news comes as Microsoft continues to streamline its Xbox division. In January, the company announced the layoff of 1,900 workers in its gaming sector, which accounted for approximately 9% of the unit. Additionally, in May, Microsoft closed multiple Bethesda studios that were acquired along with the purchase of ZeniMax in 2021.

It’s worth noting that Microsoft is not alone in facing challenges in the video game industry. Take-Two Interactive Software, the company behind the popular “Grand Theft Auto” franchise, closed two of its subsidiaries in May. Sony also recently removed the first-person shooter game “Concord” from Playstation 5 consoles and PCs after it underperformed.

The Impact on Microsoft

Despite these setbacks, Microsoft’s shares have been performing well, with an increase of about 13% in 2024. The company remains committed to its gaming division and continues to invest in new technologies and experiences for gamers.

It’s important to note that these layoffs are part of Microsoft’s broader strategy to optimize its operations and focus on areas of growth. By streamlining its workforce and reallocating resources, the company aims to enhance its competitive position in the gaming industry.

The Future of Xbox

While these layoffs may raise concerns about the future of Xbox, it’s crucial to understand that they primarily affect corporate and supporting functions rather than game development. Microsoft remains committed to delivering high-quality games, devices, and experiences to its loyal fan base.

With the upcoming release of highly anticipated games and the continued success of Xbox Game Pass, Microsoft’s subscription-based gaming service, the company is well-positioned to maintain its strong presence in the gaming industry.

Furthermore, Microsoft’s acquisition of Activision Blizzard provides additional opportunities for growth and innovation. The company can leverage Activision Blizzard’s vast portfolio of popular franchises, such as “Call of Duty” and “World of Warcraft,” to attract and engage a broader audience.

Conclusion

While the news of layoffs is never easy, it’s important to understand the context and broader strategy behind these decisions. Microsoft’s Xbox division remains committed to delivering exceptional gaming experiences and continues to invest in its future.

As the gaming industry evolves, Microsoft is adapting to meet the changing needs and preferences of gamers. By optimizing its operations and focusing on areas of growth, the company is well-positioned to thrive in the competitive gaming market.

Ultimately, the layoffs are part of Microsoft’s ongoing efforts to streamline its operations and position itself for long-term success. With a strong portfolio of games, innovative technologies, and a dedicated fan base, Xbox is poised to continue its impact in the gaming industry.

Sources:
– Investopedia
– Bloomberg
– IGN