Xbox has revealed intentions to reduce its workforce by 3,200 employees and to sell off five of its studios
Xbox has unveiled major job cuts, part of a redesign announced earlier. 3,200 employees, equating to 20% of the workforce, will be let go, with 1,600 of those impacted immediately, according to an email from Xbox CEO Asha Sharma, which was also shared on X.
The organization will also divest from five internal studios: Compulsion Games, Double Fine, Ninja Theory, Undead Labs, and Arkane.
These layoffs are part of a broader reduction at Microsoft, affecting 4,800 positions, which is approximately 2.2% of its global workforce.
Compulsion Games and Double Fine will become independent, retaining their intellectual property and preparation for future projects. Ninja Theory and Undead Labs are negotiating terms for new funding and ownership, focusing on the development of Senua and State of Decay 3.
Arkane is beginning consultation in France to explore its strategic options, complying with local labor laws.
Sharma’s strategy also affects other divisions such as Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, emphasizing investment in higher priority areas. Staff at Bethesda, Zenimax, and Obsidian have reported job losses.
Sharma has assured that no announced first-party games will be cancelled as a result of this organizational restructuring.
Changes in the Xbox hierarchy now mean Mojang and King will report directly to Sharma. Former VP of Product Services Dave McCarthey has left, and Helen Chiang has taken on the new role of Xbox COO, a position that integrates financial oversight of content, hardware, platforms, and services.
The new COO role indicates a shift from the earlier independent operations of various Xbox divisions.
Sharma criticized the intricate structure, revealing that some projects involved as many as 14 levels of management. Efforts are being made to simplify this structure to no more than five management layers, reduce vendor expenses by half, and enhance efficiency through a leaner codebase and shared services.
"Since 2018, we have rapidly expanded our studio portfolio, while the game industry has seen an unprecedented growth in new releases," Sharma explained.
"Today, we compete with major publishers and smaller studios. Owning every successful independent studio is neither practical nor beneficial. We’ve realized our limitations as a home for some of these studios, losing 64 cents for each dollar invested over a typical year.
"As we recapitalize Xbox, we aim to empower independent creators by offering open development tools and access to broad audiences for them to achieve their goals."
These layoffs were anticipated to coincide with Microsoft's fiscal year, which starts on July 1. Recently, numerous staff exited through a voluntary redundancy scheme, marking a first in Microsoft’s history.
This story is developing and updates will follow.