SAN JOSE: Microsoft is hitting the 'reset' button on the Xbox and cutting around 3,200 jobs at its video games division as part of plans to overhaul the business drastically, according to a company statement on July 6.
"Our business today is not healthy," Xbox chief executive Asha Sharma wrote in an email to staff, announcing the layoffs, which impact about 20% of the division's staff.
She said some work passes through 14 layers of management and that the complex organisation was slowing down decision-making. After the "reset," there should be just three to five management levels, she said.
In the first phase, 1,600 positions will be cut immediately, with the remaining jobs to be eliminated within 12 months. Sharma described the move as "the most significant restructure in Xbox history."
How will this impact gamers?
Four game development studios are also leaving the company, with Double Fine and Compulsion Games being returned to their founders. The latter studio said in a post: "As part of this transition, we will retain the rights to Contrast, We Happy Few, and our award-winning South of Midnight."
Sharma pointed to the fact that the number of players and the time they spend gaming on the Xbox platform had fallen in recent years.
Microsoft had already cut thousands of jobs following its roughly US$69bil (RM281.52bil) acquisition of video game company Activision Blizzard at the end of 2023. Sharma wrote that she aimed to achieve future growth for the Xbox business through the restructuring and wanted the company to eventually reach more than one billion daily users.
No in-house games being cancelled: Microsoft promised that currently anticipated in-house titles will not be dropped, since Xbox is protecting its publicly announced lineup even while making workforce reductions across its major acquired publishers.
"None of our first-party publicly announced games or projects are being cancelled as part of these reductions," Sharma said.
Ninja Theory, the studio behind Hellblade and Senua, and Undead Labs, the makers of State of Decay, are being sold; however, Sharma said there is "funding to complete and grow Senua and State of Decay 3."
Delayed releases possible: Xbox is reallocating its investments to prioritise specific high-priority titles over others, meaning gamers may notice delayed timelines on projects.
"We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects," Sharma said.
Minecraft could become more distinctly Xbox: Xbox's major gaming platforms, Minecraft and King's mobile titles, will be managed more centrally and directly, potentially leading to closer integration with the broader Xbox ecosystem.
"Mojang (the developer behind Minecraft) and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players," Sharma said. – dpa
