Microsoft Axes 9,000 Jobs in Strategic Shakeup—Xbox Division Takes Heavy Blow

Redmond’s cost-cutting guillotine drops—again. Microsoft just announced a brutal 9,000-job cull, with its gaming division squarely in the crosshairs. The Xbox bloodbath signals more than just belt-tightening—it’s a power move in the console wars’ endgame.

Wall Street’s already pricing in the ‘efficiency gains’ (translation: bigger dividends while game studios crumble). Meanwhile, crypto-native studios keep shipping play-to-earn hits without firing a single employee—but hey, who’s counting?

TLDRs;

• Microsoft has laid off 9,000 employees, with major cuts in its Xbox and gaming units.
• Game cancellations and studio closures accompany the restructuring, including Rare’s Everwild and The Initiative.
• The layoffs follow Microsoft’s massive $69B acquisition of Activision Blizzard and reflect a shift toward streamlined operations.
• Despite high profits, Microsoft says the changes are necessary to stay competitive in a rapidly changing gaming landscape.

Microsoft has confirmed a new wave of layoffs affecting 9,000 employees worldwide, with a significant number of the cuts impacting its gaming division, including the Xbox and Activision Blizzard teams.

The decision marks the company’s most severe round of job reductions since its $69 billion acquisition of Activision Blizzard in late 2023.

Employees within Microsoft’s gaming arm began receiving notifications on Wednesday morning. Among those hit hardest are teams based in Europe, including the King division in Stockholm, known for developing Candy Crush, which is losing roughly 200 staff, or about 10 percent of its workforce. US-based units are also being informed, with sources indicating similar restructuring measures.

Phil Spencer, the CEO of Microsoft Gaming, acknowledged the layoffs in an internal memo. While expressing empathy for those affected, Spencer framed the move as a necessary step to streamline operations and secure future growth. He emphasized that despite strong engagement from players and a promising roadmap of games and hardware, Microsoft needs to focus its resources on its most strategic opportunities.

Spencer’s message stressed that the company is not cutting back due to weak performance, but rather to align its workforce with long-term goals. Part of that alignment involves reducing management layers and winding down projects that no longer fit within the company’s evolving priorities.

Game studios and titles caught in the crossfire

One of the most visible casualties of the restructuring is The Initiative, the Xbox studio behind the long-anticipated Perfect Dark reboot, which has now been shut down entirely. Rare’s Everwild has also been scrapped. The announcement came from Matt Booty, the head of Xbox Game Studios, who highlighted the emotional toll such decisions have taken internally.

Booty told affected teams that the decisions were not made lightly and reflected a painful but deliberate shift toward projects with a higher likelihood of commercial success. He acknowledged the creativity and dedication that had gone into the now-cancelled games but stressed that the company had to prioritize scalability and profitability in a rapidly evolving market.

A pattern of reductions

This marks the fourth major round of layoffs for Microsoft’s gaming division in less than two years. In early 2024, nearly 2,000 jobs were eliminated from Xbox and Activision Blizzard units.

The company also shuttered multiple ZeniMax-owned studios last year after its acquisition of the gaming conglomerate in 2021. These repeated rounds of layoffs underscore the volatile state of the gaming industry, where studios face mounting pressure to deliver blockbuster results on tight budgets.

Layoffs amid strong financials

Microsoft’s overall financial health remains robust, with the company reporting over $25 billion in net income during its latest quarter. Critics have noted the apparent disconnect between the aggressive workforce reductions and the company’s rising profits. A Microsoft spokesperson defended the MOVE by stating the layoffs are part of a long-term effort to adapt to shifting market conditions and ensure organizational agility.

Despite its strong performance on paper, Microsoft appears determined to future-proof its gaming division by consolidating efforts around its highest-potential assets. As the company sharpens its focus, the broader gaming community is left grappling with the human and creative costs of that strategy.