Tech titan Microsoft is, according to media reports, gearing up for another round of job cuts within its Xbox gaming division, with major reductions anticipated as early as next week. This development marks the fourth major wave of layoffs to impact the Xbox unit in the past 18 months, owing to ongoing restructuring efforts within the tech giant’s gaming and broader sales organizations. Sources familiar with the internal discussions indicate that managers across the Xbox group have been briefed on impending, substantial workforce adjustments. Microsoft has declined to comment on these reports, so take this with a grain of salt until it has been officially confirmed.
The timing of these layoffs precede the conclusion of Microsoft’s fiscal year on June 30, a period when the company often implements organizational changes. Beyond the gaming segment, job reductions are also expected to affect Microsoft’s sales operations as the new financial year commences. These anticipated cuts will follow previous rounds of layoffs, including approximately 6,000 positions eliminated in May, and over 300 additional roles impacted earlier this month across Microsoft’s diverse business units.
The impending reductions in the Xbox division occur amidst a turbulent period for the gaming industry, that includes by rising development costs, shifting consumer behaviors, and a renewed focus on profitability by major publishers While it has acknowledged “losing” the traditional console war, Microsoft has pivoted towards a subscription-centric model with Xbox Game Pass as its centerpiece, offering a list of games and day-one access to first-party titles.
For now, Xbox has expanded its multi-platform strategy to bring its proprietary games to rival consoles like PlayStation and Nintendo Switch. The multi-billion-dollar acquisition of Activision Blizzard in 2023 also brought an extensive portfolio of franchises under Microsoft’s ownership. However, the deal came with its own issues and regulatory complications, and in January 2024, approximately 1,900 Activision Blizzard and Xbox employees were laid off as part of post-merger adjustments. This was followed by the controversial closure of several established game studios in May 2024, including Tango Gameworks, known for “Hi-Fi Rush,” and Arkane Austin, developer of “Redfall.” Another 650 Xbox employees were impacted in September 2024, primarily across corporate and support functions.
Despite ongoing restructuring, Microsoft itself has reported decent financial performance, with recent quarterly results showing increased net revenue and profit across the company. The Xbox division has also posted year-over-year revenue growth, largely attributed to the inclusion of Activision Blizzard’s content and services. However, this growth has not translated into a cessation of workforce reductions, indicating a focus on long-term sustainability and optimizing profit margins within the gaming segment.
In addition to this, the current generation of Xbox consoles, the Xbox Series X and S, has seen drops in hardware sales, especially compared to the same of the Xbox One. To counter this, Microsoft has adjusted hardware prices and explored partnerships for branded devices, including an Xbox-branded handheld and a Meta Quest VR headset.
