Microsoft recently announced significant workforce reductions. The company laid off approximately 9,000 employees on Wednesday. This marks Microsoft’s second major cut this year. These layoffs affect less than 4% of Microsoft ‘s global workforce.
The Xbox gaming division experienced a substantial impact. Several high-profile game cancellations and studio closures accompanied the job cuts. The Initiative studio, for example, will close entirely. This follows the cancellation of the highly anticipated Perfect Dark reboot. Rare Studio’s Everwild, in development for years, was also terminated.
Microsoft Layoffs Impacted Gaming Studios:
- King (makers of Candy Crush)
- ZeniMax
- Raven Software
- Sledgehammer Games
- Halo Studios
- Turn 10 Studios
King’s Stockholm-based division is cutting 10% of its workforce, eliminating around 200 positions.
These cuts span various teams, geographies, and tenure levels. Microsoft aims to streamline operations and reduce management layers. An internal memo from Xbox CEO Phil Spencer highlighted the need to “position Gaming for enduring success.” He stated the company will “end or decrease work in certain areas.”
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This is Microsoft’s fourth mass layoff in the gaming division in 18 months. It follows their $69 billion Activision Blizzard acquisition in October 2023. The company previously cut 6,000 positions in May and 300 more in June. Microsoft cited the need to “remove layers of management” and redirect resources towards AI development. Microsoft’s AI-related expenses reached approximately $80 billion last fiscal year.
