Microsoft announced a significant restructuring of its gaming division, resulting in layoffs across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. This reduction represents about a fifth of the Xbox division workforce. The cuts followed acquisitions where Microsoft told the FTC and the courts that there wouldn’t be layoffs.
Scope of Microsoft Gaming Reductions
According to an internal memo sent to staff by CEO Asha Sharma, the cuts were part of a strategy to focus staff and money investments primarily into “core franchises” in the gaming space.
While the layoffs affected multiple departments, the impact was seen across the organization. 1,600 layoffs took place immediately, with the total eventually affecting over 3,000 staff members.
Impact on Xbox Studios and Publishing
The restructuring extended across various first-party studios. Microsoft confirmed that the cuts touched development teams under the ZeniMax and Xbox Game Studios banners.
Despite the reduction in headcount, Sharma stated that none of Xbox’s first-party, publicly announced games or projects are being canceled as a part of these cuts. Mojang and King will now report directly to Sharma. Compulsion Games and Double Fine will become independent studios, while Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. Arkane Lyon is entering consultation in France to review its options.
Regulatory Context and Employment Trends
The layoffs occurred after Microsoft finalized acquisitions, a process that faced scrutiny from regulators including the U.S. Federal Trade Commission (FTC). During the legal proceedings, Microsoft said that layoffs wouldn’t occur.
The scale of the layoffs reflects the current state of the division. Current and former staff have reported that job losses across Bethesda Game Studios locations have removed more than 50 employees, including people building the company’s Skyrim successor, which has raised the risk that the game’s completion date will be delayed.
Future Outlook for Xbox Operations
Microsoft has signaled that it intends to focus its future gaming investments on “core franchises” in the gaming space. By bringing King and other units under a unified management structure reporting to Asha Sharma, the company aims to optimize its operations.
Remaining employees are now navigating a period of transition. Staff at Bethesda offices set up “Celebrations of Service” for ex-coworkers, but Xbox HR ordered those memorials be taken down because they were in a common area.
Key Facts
- Total Layoffs: over 3,000 employees.
- Affected Units: Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios.
- Leadership Changes: Mojang and King now report to CEO Asha Sharma.
- Studio Impact: Compulsion Games and Double Fine becoming independent; Ninja Theory and Undead Labs joining new ownership.
- Strategic Focus: Core franchises.
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