Microsoft lays off thousands of employees, affecting Xbox and various game projects
The layoffs mark another round of major workforce reduction for Microsoft's gaming division in the past year.
Microsoft’s latest round of layoffs isn’t just another corporate belt-tightening—it marks a sobering recalibration of its gaming ambitions. The company is cutting approximately 9,000 jobs, around 4% of its global workforce, and once again, Xbox is taking a direct hit.
Even as Microsoft reports record-high player engagement, some of its biggest gaming bets are being shut down or scaled back. Turn 10 Studios, known for Forza Motorsport, lost more than 70 employees. The Initiative, the studio once tasked with rebooting Perfect Dark, is now done. Rare Studio’s troubled adventure game Everwild is also off the table.
Meanwhile, ZeniMax has shelved an unannounced MMO (Massively Multiplayer Online) game it had been quietly building for years. Even internal departments that support development, like user research and family safety, have seen significant reductions.
Mobile gaming hasn’t been spared either. King, the Microsoft-owned studio behind Candy Crush, is cutting around 200 jobs, or roughly 10% of its workforce.
In a message to staff, Xbox head Phil Spencer claims the cuts as part of a strategy to “focus on our strongest opportunities” and reduce layers of management. He emphasised that Microsoft is still investing in gaming, but made it clear that not every studio or project aligns with the company’s future plans.
Much of that future, increasingly, revolves around AI integration, cloud services, and Game Pass, rather than traditional big-budget exclusives.
This isn’t the first major cut, though. In early 2024, Microsoft laid off 1,900 people across Xbox and Activision Blizzard. Another 6,000 roles were cut from other parts of the company just months ago. But this July round is the biggest yet, and the most symbolic.
Industry-wide, Microsoft isn’t alone. Since 2022, layoffs have hit nearly every major publisher—EA, Ubisoft, Sony, and Unity among them. Game development has grown increasingly expensive, while returns have become harder to predict.
Unfortunately, hundreds of developers are now out of work. Fans lose long-awaited games. Whether this pivot will ultimately sharpen Xbox’s focus or cause lasting damage to its creative momentum remains to be seen.
