The lack of growth as a key issue for Microsoft's gaming business in light of the new wave of layoffs

Microsoft Gaming has once again parted ways with hundreds, if not thousands, of employees, reaping the consequences of its irresponsible expansion. We delve into the scale of layoffs within the gaming division, as well as the underlying causes of these processes. At a crossroads, the company struggles to figure out how to turn its impressive catalog of IPs into growth.

“We will discontinue or reduce work in certain areas of the business and follow the entire Microsoft approach of cutting down managerial positions to enhance flexibility and efficiency,” said Phil Spencer in addressing the Microsoft Gaming staff following the latest wave of layoffs on July 2.

This rhetoric indeed aligns with the corporation's overall direction. Back in April, during a conversation with investors, Chief Financial Officer Amy Hood emphasized that the company is focused on enhancing team efficiency by “flattening the hierarchy,” meaning reducing the number of managers. The primary goal is to eliminate unnecessary chains and make business processes more flexible, allowing each manager to oversee more people.

However, the latest round of layoffs at Microsoft Gaming has deeper reasons, not only tied to a global strategic course revision but also connected to the chaotic structure and questionable efficacy of the Xbox business.