Xbox is gearing up for another significant round of layoffs, according to Bloomberg.
On Wednesday, the publication reported that “major job cuts” are planned for Microsoft’s gaming division next month. While Bloomberg says the scope of these layoffs isn’t yet clear, they’re expected to happen “shortly” after Microsoft’s fiscal year ends on June 30. The outlet adds that Microsoft is also planning to “significantly” reduce budgets for marketing and “some other areas of the business,” although it’s not clear exactly what those might be.
Unfortunately, this is par for the course with Xbox at this point. Despite having enough money to make one the biggest deals of all time with its US$69 billion acquisition of Activision Blizzard (among many other smaller buyouts), it has apparently not been able to avoid continued rounds of layoffs over the past few years, including nearly 10,000 last summer across Microsoft (many of which were at Xbox) and the closure of beloved studios like Prey developer Arkane Austin (Prey) and Hi-Fi Rush maker Tango Gameworks. (The latter was, at least, revived last year under South Korean gaming giant Krafton.)
All the while, Microsoft continues to rake in even more billions. Last quarter alone, the company brought in US$82.9 billion (about C$116.1 billion) in revenue, an 18 per cent year-over-year increase. Amy Hood, Microsoft’s chief financial officer, said these were “results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud.” But yet, they keep acting like they can’t afford to pay their hard-working developers.
The layoffs news came alongside an email that Xbox CEO Asha Sharma and Xbox CCO Matt Booty sent to employees, which the company posted on its blog shortly after Bloomberg published its initial story. In it, Sharma and Booty recapped what they’ve done over the past 100 days since the former succeeded Phil Spencer but acknowledged that much more work needed to be done as they “reset the business.”
As the pair explained, Xbox’s annual revenue has been declining year-over-year, while the cost of everything, particularly hardware components, continues to rise. (Of course, neither longtime Xbox executive Booty nor Sharma — a former Microsoft AI boss — acknowledged that the company’s multi-billion-dollar investment into AI is a key reason for why these components are getting more expensive in the first place.)
Sharma did, however, recently reduce the price of Xbox Game Pass, noting consumers were being priced out. And just this week, following its annual games showcase, she teased that Xbox is looking into “radically different” business models for hardware, including, potentially, consoles with varying storage capacities. In the memo, Sharma and Booty also said Xbox needs to more “adequately” support its flagship franchises while investing in new first- and third-party IP, all while reducing the time it takes to make games. (Again, no mention of AI, so it’s unclear if the company believes it can use that tech to expedite development cycles.) The company has also committed to returning to exclusives like Vancouver-based The Coalition’s Gears of War: E-Day (launching October 6) and next year’s Clockwork Revolution.
But of course, talking a big game is one thing, and it’s hard to feel optimistic about a brand that has repeatedly been tossing its talented developers through the wringer with layoffs, game cancellations and other ever-changing business decisions. While tens of thousands of layoffs in general have been plaguing gaming (including, on the same day as Bloomberg‘s report, Ubisoft shuttered its Winnipeg and Belgrade studios), it’s particularly egregious from a company as massive and wealthy as Microsoft.
