Microsoft's Xbox division is undergoing a significant restructuring, with plans to eliminate approximately 3,200 jobs, representing an estimated 20% of its global workforce. The cuts, which have left many employees 'stunned', will see half of those affected depart immediately, with the remaining 1,600 roles phased out over the next 12 months. This move comes as the video game giant, which owns popular studios like ZeniMax/Bethesda and Activision Blizzard, seeks to 'reset the business' and pivot its focus towards its biggest blockbuster titles.
The decision follows weeks of speculation and an internal memo from Xbox's new chief executive, Asha Sharma, outlining the need for a strategic overhaul. Xbox leadership has defended the 'painful' cuts as essential for future success, aiming to allocate more resources to its most popular series to bring new instalments to fans more quickly. However, former employees, including game developers and quality assurance testers, have voiced concerns that the layoffs are stripping the company of decades of valuable talent and experience, potentially undermining its ambitious goals.
This wave of redundancies at Xbox is not an isolated incident but rather part of a broader trend within the video game industry. Since 2022, an estimated 58,000 roles have been cut worldwide. This widespread contraction is largely attributed to aggressive expansion and significant over-hiring around 2020, a period when the COVID-19 pandemic triggered an unprecedented boom in player numbers and consumer spending on games. During this time, Xbox made substantial acquisitions, including the £56 billion purchase of Call of Duty maker Activision Blizzard in 2023.
Despite the industry's profitability, the cost of developing video games has escalated dramatically. Factors such as the ongoing cost-of-living crisis, evolving customer habits, and soaring hardware costs – partly driven by massive investments in artificial intelligence – have all contributed to a challenging market environment. Employees at various studios, including ZeniMax Online Studios and Bethesda Game Studios, described a period of 'deafening silence' and intense uncertainty between the initial memo and the announcement of the layoffs, with many blindsided by the scale of the cuts.
The impact of these cuts extends even to studios working on core franchises. Simon Prefontaine, a game designer at Bethesda Game Studios' Montreal office, expressed shock at the extent of the layoffs, having initially believed his team would be relatively safe. Similarly, Andrew Willis, a producer at ID Software, whose studio released a major expansion for 'Doom: The Dark Ages' just a day after he was laid off, claimed some staff worked excessive hours to meet deadlines, only to find themselves among those let go.