Despite bold proclamations of strength from Xbox chief Phil Spencer, Microsoft is once again enacting sweeping layoffs across its gaming division—part of a larger cut affecting nearly 9,000 employees company-wide.
According to reports, the latest round of job cuts includes closures and cancellations across several high-profile studios and projects. Among the most notable casualties: Rare’s long-in-development Everwild, ZeniMax Online’s mysterious MMO project, and the Perfect Dark reboot, with the entire studio behind the latter—The Initiative—now shuttered. Further layoffs have hit Blizzard, Forza developer Turn 10, and social game studio King, which has already seen a 10% reduction (roughly 200 employees). Cuts are also affecting European teams, with U.S. studios reportedly informed soon after.
This comes after Microsoft confirmed earlier this year its intent to reduce its workforce by 3%—around 7,000 jobs. That followed the 10,000 roles cut in 2023 and an additional 2,500 in 2024, as the company continues to “restructure” post its $69 billion acquisition of Activision Blizzard in October 2023.
Yet, despite these major contractions, CEO Satya Nadella painted a different picture in the company’s 2024 annual report. With record-breaking revenue of $245 billion (up 16%) and operating income of $109 billion (up 24%), Microsoft’s financials are booming. Nadella emphasized the company’s pivot toward AI, calling it a critical “platform shift,” even as reports suggest internal resistance to adopting Microsoft’s own AI tools.
Phil Spencer, in a memo confirmed by Microsoft, insisted the cuts were a strategic move:
“Our platform, hardware, and game roadmap have never looked stronger,” Spencer wrote. “We must make choices now for continued success… We will protect what is thriving and concentrate effort on areas with the greatest potential.”
The memo attempts to strike a tone of optimism, claiming the restructuring will “increase agility” and deliver “exceptional games and experiences for players for generations to come.” But for many, the timing and tone feel contradictory.
In the face of cancelled games, shuttered studios, and thousands losing their jobs, Microsoft’s cheerful declarations of growth ring hollow. Critics argue that pivoting away from developers who make beloved titles—just to chase AI-driven strategies—could alienate both players and staff.
A Microsoft representative told PC Gamer that while the gaming division is significantly affected, it doesn’t represent the majority of the 9,000 layoffs.
“We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” the company said.
But for many in the industry, the message is clear: growth is prioritized, even if it comes at the cost of the people who helped build it.
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