Microsoft announced on Monday, July 6, the suppression of 4,800 positions, including 3,200 at Xbox, the group’s video game division. A third of the employees concerned are laid off today. Furthermore, four studios of the branch are becoming independent again: Compulsion Games (South of Midnight), Double Fine Productions (Psychonauts, Kiln), Ninja Theory (Senua’s Saga) and Undead Labs (State of Decay). The latter two will be bought by “a new owner.”
Why is Microsoft cutting Xbox jobs?
Asha Sharma, the new CEO of Xbox, described this restructuring as “the most important of (its) history.” She explained it is due to a drop in performance linked to the price of components, the fall in console sales, and market competition, dominated by the PlayStation 5 and the Switch 2. “Our activity is currently in difficulty. Our margins are 3 to 10 times lower than those of comparable platforms and publishers,” the executive explained on her X account.
Sharma believes that the reduction in staff is mandatory to build the best future for Xbox “and not to restrict it.” She detailed that the Xbox Game Pass has not experienced growth “at the level of our expectations,” adding that the group “learned that it was not the best environment for all types of studio.” As a result, Microsoft lost an average of 64 cents for every dollar invested.
What is the impact on game studios?
As for the French studio, Arkane Studios, based in Lyon, its future is still pending since contacts have been made with the social and economic committee (CSE) to put “several strategic options” on the table.
Furthermore, structures will be reorganized: Mojang, the studio behind Minecraft, and King and Candy Crush Saga will be placed under the direct tutelage of Asha Sharma and the levels of hierarchy will be reduced to five maximum compared to fourteen currently.
How does this compare to the broader gaming industry?
The gaming sector is dominated by the PlayStation 5 and the Switch 2.
| Company | Focus of Restructuring |
|---|---|
| Microsoft | Reduction of 4,800 positions and reorganization of hierarchy |
What happens next for Xbox?
“We will return to growth in 2027,” Asha Sharma assured, recalling that “history is full of companies that believe they are indispensable because they have been there for a long time” and concluded: “We will not be one of them.”