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 have 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.
Update at July 2, 2025, 3:51pm CT:
Aftermath is reporting that Blizzard was also impacted by Wednesday’s layoffs. According to an email from Blizzard president Johanna Faries that Aftermath viewed, the company is essentially moving Warcraft Rumble, the 2023 free-to-play mobile game, into maintenance/live-ops mode. This means that while the game will still be supported, no new content will likely be produced.
According to the email viewed by Aftermath, Faries reportedly stated that “several” of the Warcraft Rumble developers are transitioning to new projects, but some were affected by the layoffs. Faries also reportedly mentioned impacts to Blizzard’s customer service and marketing departments. According to the report, the number of impacted Blizzard employees could reach as high as 100, with the Overwatch team appearing to escape unscathed this time around.
Microsoft is such trash. It’s truly amazing how much they’ve enshitified over the past 10+ years. Their OS versions have consistently been bad since Win 7, with a minor uptick when win 10 cam out, but that was on the heels of win 8.1, so it mostly was better by comparison. Server hasn’t gotten better, same general product with a worse interface. They oddly duplicate some products like business or personal Skype, OneDrive, new v old teams, and new v old Outlook, the new that still doesn’t work properly even having been out for over a year. The obvious yet egregious spying and data collection on top of the forced ads in the OS that most people have paid for. The hard push to force users to sync everything with OneDrive. It’s all just trash.
Now you have the huge investment in copilot. Anecdotally, it’s also trash and over priced. Every software I use for work has somehow got ties or available ties to copilot and we have initiatives to try and shoehorn that trash into our business. It’s consistently a worse and unpredictable solution across the board. I personally think it’s pretty clear at this point that all of the LLMs have peaked, the huge companies have already surpassed the peak usefulness and accuracy of these models, and now they are trying to claw back as much as they can to recoup loses. It’s not going to be successful, because while tons of businesses are investing, there are far more that won’t or can’t because it’s so price prohibitive. I’m fucking here for it. Watching any company that replaced people with AI or forced users to use it and kept metrics in utilization go under would give me more schadenfreude than I’ve ever experienced.
Heard from someone who works at Microsoft, not the gaming branch, they’re telling new hires they havs 7 days to make a code change with AI or they’re out.
God this is going to be quite the bubble burst
One of my good friends is a senior dev. His company is tracking lines generated by AI and has metrics and goals. It’s absolutely disgusting.
What the hell is the point of that?
“Remember the degree you have in order to land this job? Throw that shit out the window, we are here to VIBE!!”
Everything good starts off kinda cool and niche. Then money people get hold of it and give it room to grow. Then it is great and would remain great in this happy space where it doesn’t cost too much to make and isn’t burdened with extras and advertisements. Then they want it to grow more than it feasibly can. So, it gets ruined by corporatism and capitalism. It gets buggy or broken, it gets adverts and microtransactions or time locks to squeeze money out of it until it is now so shit and so expensive no one wants it anymore and they have to either can it or can something else to pay for it.
This is the life cycle of everything good in your life since you were born.
If there was some way to get money people to not try to push past the natural limit of any one products profitability, we might see more better and sustainable products as well as more innovation and invention.
Capital and profit often block great ideas from happening because it would adversely affect a product that currently makes a lot of money.
Ex Microsoft contractor here.
Genuinely one of the worst places I’ve ever worked at, run almost exclusively by fascist-adjacent personalities fixated on crawling their way to a secure spot in the org with zero empathy for the lives they trample over.
Not having to attend another godawful teams scrum on some asinine, consumer-abusing feature will continue to remain a high point for the remainder of my career.
This represents the fourth time in 18 months that Microsoft Gaming has laid off workers.
Morale there must be terrible
Not just there - morale in game dev as a whole is rock-bottom. There’s been a layoff seemingly every other week since the end of 2023 and very few companies are actively hiring any more.
I’m not sure how aware the average consumer is of the state of the industry beyond a handful of high profile layoffs, but make no mistake: it’s in free fall right now, and people are leaving/being forced out in droves.
If you’re thinking of becoming a game dev right now, the best advice I can give is don’t.
The fuck is going on there? What is the goal here??
Saw some article about how MS has planned to invest about $80B in infrastructure for AI stuff, do they are cutting any expense they can.
Didn’t read the article in detail. Too tired of this now.
If it was real A.I then it might be cool, but LLM aren’t worth that kind of investment. Sure they’re helpful for praising documents but the fuck else they going to be used for? Writing crap articles? How do LLM help in game development at all??
This is not just for Xbox, 9000 layoffs are against whole MS. Xbox just got hit heavier than anyone else.
To pay for the Activision acquisition.
You’d think those would be the people to fire
I would think the people to fire are the ones that cost the company the most money. The ones at the top making all the stupid decisions.
Save more money firing one higher up than 1000 regular employees.
They bought competing game companies with a promise not to dismantle them. Now their game development divisions are overstaffed, because there’s not as much competition.
Anyone who believes this wasn’t Microsoft’s plan all along should reach out to me, as I am selling the Brooklyn Bridge for cheap. (This is meant to be an amusing reference to falling for an old and famous scam - much like the public is scammed when illegal mergers are approved.)
To license Xbox hardware to third parties, and get you to sign up for Game Pass. Gonna milk what they own without investing further.
Our outrage means nothing in the face of microtransactions and AI.
7 years of development, down the drain.
Fuck Microsoft. They’ve never been pro-consumer nor a decent employer. Just another garbage mega-corp.
“We are making more money than ever but the parents want to spend everything on AI so gotta let you go and ruin our chance to have good first party studios, sorry”
It’s always the fucking suits.
Not just that, being a game dev is difficult right now where high turnovers are almost everywhere, and always have to keep the CV current and ready in case the suits start telling they’re cutting out jobs.
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