Microsoft has announced it has cut 4,800 jobs – roughly 2.1% of its workforce – with Xbox to bear a large number of its latest layoffs.
Amy Coleman, executive vice president at Microsoft, told employees in a memo that the tech giant needed to focus on areas that can deliver for customers amid a “fast-changing industry”.
The sweeping layoffs will see more than 1,600 roles immediately axed at Xbox.
Asha Sharma, who recently took over as Xbox’s chief executive, said in a note to staff it was “beginning the most significant restructure in Xbox history”.
Another 1,600 jobs will be lost in the coming year, Sharma said in the note, shared on X, external.
Four Xbox game development studios – Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab – would also be spun off as part of the changes, she added.
“These changes are about a bigger future for Xbox, not a smaller one,” Sharma said.
“History is full of companies that mistake longevity for inevitability. We will not be one of them.”
Coleman meanwhile pointed to a changing customer needs in announcing Microsoft’s company-wide cuts.
“Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it,” she said.
She noted that while the company would not replace the lost roles with AI, “what is true is that AI is changing how work gets done”.
Industry challenges
The announcement comes at an already difficult time in the gaming industry, with many studios still reeling from brutal layoffs in recent years.
In 2024, Xbox culled more than 2,000 staff and shuttered four studios bought prior to its bumper acquisition of Call of Duty maker Activision-Blizzard.
Little more than a year later, Microsoft said it would lay off as many as 9,000 workers after setting out plans to double down on its multi-billion-dollar AI spending.
The spiralling costs of hardware have also prompted firms including Microsoft to hike the price of years-old consoles and similar consumer gadgets – with many blaming AI data centres for pushing up demand too quickly for supply to catch up.
Sharma said on Monday that while she knew the cuts were “painful”, there was a “reset” needed across Xbox’s entire content portfolio, platform and operations.
She added that as part of this, Minecraft developer Mojang and Candy Crush developer King would now report directly to her.
Tech firms are blaming AI for mega device and console price rises
Xbox producer tells staff to use AI to ease job loss pain
PlayStation will stop releasing games on discs in 2028
Sign up for our Tech Decoded newsletter to follow the world’s top tech stories and trends. Outside the UK? Sign up here.
