Microsoft & Xbox Catching Hell On X After New Rounds of Layoffs

Source: picture alliance / Getty / Microsoft / Xbox / Phil Spencer

Wednesday was a rough one for Microsoft and Team Xbox. The Seattle Times reports that Microsoft is giving about 9,100, or about 4 percent, of its workforce pink slips.

According to the report, the Xbox division, aka Microsoft Gaming, will be hit the hardest as a result of these layoffs, but the exact number remains unknown.

In a message to the team, Xbox head Phil Spencer said to the team, “To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”

The sad news also means that these layoffs will impact games. According to Bloomberg, the Microsoft-owned King division, the maker of the wildly popular Candy Crush mobile game franchise, is laying off 10 percent of its employees, or approximately 200 people.

Zenimax also confirmed it was laying off employees. Turn 10, the studio behind the Forza Motorsport franchise, is laying off more than 70 employees.

The long-talked-about Perfect Dark game from the now-shuttered studio The Initiative and Crystal Dynamics, along with Everwild, has been canceled.

Perfect Dark was just revealed during the Xbox Games Showcase in 2024, so that means there’s a possibility that more games shown during that event could be put on ice by Microsoft.

This latest round of layoffs follows Microsoft’s layoffs of more than 6,000 employees less than two months ago, which were subsequently supplemented by an additional 305 reductions in early June.

Phil Spencer’s entire memo to the team, speaking about the recent round of layoffs, reads:

Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.

Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.

Phil

You can see reactions to the announcement of the unfortunate layoffs in the gallery below, spoiler alert, Phil Spencer might want to stay off social media for a while.

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