Xbox Layoffs Are Not Done Yet

Microsoft's "reset" of the Xbox business entered its next chapter this week with the announcement of 268 more layoffs, along with other drastic organizational and operational changes for the gaming giant. As part of the announcement, Xbox boss Matt Booty said this latest wave of restructuring, combined with the changes completed in July, brings the company up to "roughly three-quarters of the way through" the planned changes. In essence, he’s saying that the Xbox “reset” effort isn't over yet, so further layoffs and other changes are expected. Microsoft's "reset" of the Xbox business is not done yet. In July, Xbox announced that it was laying off 1,600 people immediately, with a further 1,600 layoffs to come during Microsoft's fiscal year 2027, which ends June 30, 2027. With 1,600 cuts in July and 268 more today, that leaves 1,332 still to come. Even if that math isn't totally accurate given how microsoft tallies things, it's definitely true that many more staff reductions are coming. According to comments from reporter Jason Schreier this month, layoffs at the Warcraft and Diablo company Blizzard are coming imminently. This would be just after Blizzard made a series of big announcements at BlizzCon. GameSpot has contacted Microsoft seeking comment on the accounting details for the cuts so far and what could come next. The latest wave of cuts at Xbox hit Halo Studios, other first-party game developers, and the Xbox Game Studios management and central functions teams. The impact at Halo Studios appears to be significant, as Booty confirmed that the next Halo game is being made at Activision, not Halo Studios. Why is Microsoft doing this? Xbox CEO Asha Sharma, who took over the job from Phil Spencer just this year, said the Xbox business was in an unhealthy place and needed to be overhauled. She cited a number of reasons, including Microsoft's big bet on Game Pass simply not working out and the shift away from exclusives promoted by Spencer and Sarah Bond eating away at the overall Xbox business. At the same time that Microsoft spent more on teams, games, and services at Xbox, the company's "core business weakened," Sharma said. Not only that, but the gaming industry has been significantly affected by what Sharma called the "most severe hardware crisis in its history," referencing the memory and component shortages caused by the AI craze. Ironically, Microsoft itself directly and significantly contributed to this. These factors contributed to a situation in which Sharma felt it was necessary to “reset” the Xbox business through drastic and painful changes. At the same time, part of what's to blame is the fact that Microsoft is a publicly traded company whose shareholders demand endless growth. Sharma said some of the investments and bets made by Spencer and Bond did indeed create "meaningful value," but the line did not go up as fast and far as is required under capitalism. Microsoft is raking in the money Microsoft is a gigantic company; it is currently the No. 4 most valuable company on Earth with a valuation of close to $4 trillion. To be sure, gaming is just one part of Microsoft's business, and it's nowhere close to the biggest one. That being said, for Microsoft's latest quarter, the company brought in $90 billion in revenue and posted a net profit of close to $36 billion. Many have pointed out the seemingly cruel reality of Microsoft posting gigantic profits at the same time it makes drastic cuts. Even Microsoft CEO Satya Nadella has acknowledged the apparent incongruence of this reality, saying Microsoft is thriving by every objective measure but still cutting staff due to “the enigma of success.” Needless to say, his comments did not go over well, with one industry expert saying "catastrophic mismanagement" and AI gambits have contributed to the cuts at Xbox in recent times.

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