Microsoft starts a new round of job cuts and the next phase of its Xbox 'reset.' Read the memo.
Microsoft started a new round of layoffs on Tuesday, primarily in its Xbox gaming division but also including roles in other units such as Cloud + AI.
Microsoft initiated a fresh round of layoffs on Tuesday, affecting approximately 500 employees. Primarily targeting its Xbox gaming division, a limited number of positions in other departments, including cloud and AI, were also impacted. This follows a similar round of cuts in July, where Microsoft announced the reduction of 2.1% of its global workforce, totaling around 4,800 employees at that time.
The latest layoffs are part of Microsoft's ongoing efforts to streamline its gaming business following years of expansion and significant acquisitions. Xbox is targeting a 20% workforce reduction by the end of the current fiscal year, with ongoing reorganizations of studio groups and decisions on which businesses it intends to retain. According to Xbox executive Matt Booty in a memo, the studio divestitures completed since July represent about three-quarters of the way through the previously announced restructuring.
In the latest developments, Microsoft announced the elimination of 268 gaming roles, including those at Halo Studios, other first-party studios, and the Xbox Game Studios management layer. These actions, along with studio divestitures, bring Xbox closer to its restructuring goals. Additionally, Xbox is reorganizing its studios to strengthen franchises and games by operating fewer business units, aligning groups that work closely together, and focusing publishing expertise.
Certain studios will undergo expansion, such as Activision taking over the World's Edge and Rare divisions, as well as leading the next Halo title. Bethesda will now oversee Obsidian, continuing its projects like Grounded and the new Fallout collaboration. King will broaden its focus to include Microsoft Casual Games. Playground and Turn 10 will merge to concentrate on the Forza and Fable franchises.
Meanwhile, the divestiture of studios Compulsion and Double Fine has been completed, with Undead Labs transitioning to a new publisher and releasing State of Decay 3 on Game Pass. However, two separate agreements for Ninja Theory did not materialize, and the company is consulting employees on a proposed closure while exploring alternative options. Arkane's consultation remains ongoing and is expected to continue through the end of the year.
Microsoft emphasizes the need to support those affected by these changes and treat each other with care and respect. The company plans to hold a town hall meeting on October 6 to discuss progress and look ahead to an upcoming game lineup that is expected to be one of the strongest in their history.
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