Microsoft announced Monday that it is laying off 20% of its Xbox workforce and is cutting ties with several game studios. File Photo by Jim Ruymen/UPI | License Photo
Microsoft announced Monday that it is laying off 20% of its Xbox workforce and is cutting ties with several game studios.
The company is laying off 1,600 employees and plans to terminate 1,250 more over the course of the year. It is part of Microsoft’s broader plan to cut 4,800 jobs or about 2% of its workforce.
The video game industry was a strong point for Microsoft during the COVID-19 pandemic. However, executives say they misjudged the changes facing the video game business as Xbox contended with Sony’s PlayStation 5 and the Nintendo Switch for game console dominance.
As the current generation of video game consoles began, Xbox added several AAA and indie game studios to its portfolio. As part of downsizing its workforce, at least four studios cut ties with Microsoft.
“Our platform teams are 40 percent larger than they were at the start of this generation, even as our player base and playtime have declined,” Asha Sharma, Xbox chief executive, wrote in a letter to employees. “As we reset Xbox, we will simplify.”
Sharma succeeded longtime Xbox CEO Phil Spencer in February.
Compulsion Games and Double Fine Productions will spin off into independent studios while Ninja Theory and Undead Labs “have entered terms to join new ownership,” Sharma said.
Arkane Studios, makers of Dishonored, Deathloop and Prey, was purchased as part of the $8.1 billion acquisition of ZeniMax Media in 2021. Its fate remains unclear as Sharma said it is working on strategic options.
