Microsoft Makes Deep Job Cuts Across Xbox Division, Cancels Games

Hundreds of people were laid off as the company canceled upcoming games such as Perfect Dark and Everwild

An Xbox games controller

Photographer: Alex Kraus/Bloomberg

Updated on

Takeaways by Bloomberg AI

Microsoft's gaming division laid off hundreds of employees as part of a broader cost-cutting effort, with widespread and significant cuts across subsidiaries.
The layoffs affected various units, including King division, ZeniMax, Raven Software, Sledgehammer Games, Halo Studios, and Turn 10 Studios, with some projects canceled, including Everwild and Perfect Dark.
The gaming division had about 20,000 employees as of January 2024, and the layoffs are part of a strategy to prioritize growth areas, increase agility, and reduce layers of management.

Microsoft Corp.’s gaming division laid off hundreds of employees on Wednesday, part of a broader culling at the software company as it seeks to control costs.

An Xbox spokesperson declined to confirm how many people were impacted, but the cuts were widespread and significant.

Subsidiaries across the gaming organization were told that they would be affected by the layoffs. Microsoft’s Stockholm-based King division, which makes Candy Crush, is cutting 10% of its staff, or about 200 jobs, according to people familiar with the plans. Other European offices, such as ZeniMax, also began cutting employees early Wednesday, said the people, who asked not to be identified because they were not authorized to speak to the press.

News of further job cuts trickled out slowly as other units of Microsoft Gaming, such as Call of Duty studios Raven Software and Sledgehammer Games as well as Halo Studios and Forza Motorsport developer Turn 10 Studios, also announced workforce reductions, according to the people familiar.

The company canceled several projects that had been in development for years, including the fantasy game Everwild, in development at UK-based Rare Studio, and an original new online game from ZeniMax Online Studios, the maker of The Elder Scrolls Online. Both of those studios will cut jobs as a result of the cancellations, according to the people.

Xbox also canceled the planned reboot Perfect Dark and shuttered The Initiative, one of the studios behind it. In an email to staff, Xbox Game Studios head Matt Booty said that the studio shutdown and project cancellations “reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape.”

Microsoft announced Wednesday that it’s eliminating 9,000 workers companywide in its second wave of layoffs this year. The cuts will have an impact across teams, geographies and tenure, and are being made in an effort to streamline processes and reduce layers of management, a company spokesperson said. The terminations follow an earlier round of 6,000 job cuts in May that fell hardest on product and engineering positions.

The company’s gaming units were expected to be told throughout the day how many jobs would be cut at each office. The division had about 20,000 employees as of January 2024.

“To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” Microsoft Gaming Chief Executive Officer Phil Spencer said in an email to staff seen by Bloomberg News.

Employees at Xbox had been bracing for the job cuts since May, when Microsoft began conducting companywide layoffs and speculation mounted that the gaming division might be impacted. This is the fourth mass layoff at Xbox in the last 18 months. The gaming division has been under pressure to boost profit margins since Microsoft purchased Activision Blizzard for $69 billion in a deal that closed in October 2023.

(Updates with further details throughout. An earlier version of this story corrected the location of King division in the second paragraph.)

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Microsoft Cuts 9,000 Workers in Second Wave of Major Layoffs

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Updated on

Takeaways by Bloomberg AI

Microsoft Corp. is cutting around 9,000 jobs, its second major wave of layoffs this year, to control costs and increase spending on artificial intelligence.
The layoffs will affect less than 4% of the company's total workforce, across teams, geographies, and tenure, and aim to streamline processes and reduce management layers.
The job cuts may help offset rising spending on AI infrastructure and reflect a greater push to use AI tools internally, according to an analyst with Bloomberg Intelligence.

Microsoft Corp. began job cuts that will impact about 9,000 workers, its second major wave of layoffs this year as it seeks to control costs while ramping up on artificial intelligence spending.

Less than 4% of the company’s total workforce will be impacted, a spokesperson said. The cuts will have an impact across teams, geographies and tenure and are made in an effort to streamline processes and reduce layers of management, the spokesperson added.

“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” the spokesperson said.

Bloomberg previously reported that Microsoft was planning to slash thousands of jobs in July, which would target salespeople and also affect divisions including Xbox. The terminations follow an earlier round of layoffs in May that hit 6,000 people and fell hardest on product and engineering positions.

Across the tech industry, companies are grappling with the spiraling costs of staying up to date in the artificial intelligence race, whether by training the large language models that underpin the technology, building servers and data centers, or developing AI applications. After spending tens of billions of dollars on data centers and application development, Microsoft has pledged to Wall Street that it would put a lid on costs.

The reductions could help offset rising spending associated with the AI infrastructure build-out, wrote Anurag Rana, an analyst with Bloomberg Intelligence. They may also reflect a greater push to use AI tools internally, he said.

The company had 228,000 workers at the end of June 2024, 45,000 of them in sales and marketing. Microsoft often restructures teams and announces other changes near the end of its fiscal year, which closes in June.

Microsoft’s top sales executive, Judson Althoff, is planning to take a two-month sabbatical this month, Bloomberg reported last month. The company has said his leave had been previously planned and that he will return in September.

(Updates with context on Microsoft’s AI spending in fifth paragraph and BI commentary in sixth paragraph.)

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