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Microsoft cuts 4,800 jobs in Xbox overhaul

From The Punch · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Microsoft announced it will cut approximately 4,800 jobs, about 2% of its global workforce, as part of a major restructuring of its Xbox gaming division.
  • The overhaul includes shedding 3,200 gaming jobs, spinning off or selling four studios, and reviewing a fifth, with 1,600 positions cut immediately.
  • These layoffs occur as Microsoft invests heavily in artificial intelligence, with executives stating that while AI is reshaping work, the eliminated roles are not being directly replaced by it.

Microsoft is undertaking a significant overhaul of its Xbox gaming division, announcing approximately 4,800 job cuts, which represents about 2% of its global workforce. The company detailed a sweeping restructuring plan that will see the elimination of around 3,200 gaming jobs over the coming fiscal year. This includes spinning off or selling four game studios and placing a fifth under review for potential closure.

Our business is changing because the world around it is changing. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.

— Amy ColemanMicrosoft's executive vice president, explaining the rationale behind the job cuts and restructuring.

In a memo to employees, Microsoft's executive vice president Amy Coleman stated that the business is changing because the world is changing, and companies must adapt. She noted that the layoffs primarily affect Microsoft's commercial business and Xbox. While Coleman acknowledged that automation is reshaping work, she clarified that the eliminated roles are not being directly replaced by AI.

At Xbox, CEO Asha Sharma informed employees that 1,600 positions are being cut immediately, with the remaining reductions to occur through fiscal year 2027. Sharma described Xbox's business as "not healthy," with profit margins significantly lower than competitors. She has committed to returning the division to growth by 2027, emphasizing the need for the company to adapt to avoid obsolescence.

Our business is changing because the world around it is changing. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.

— Amy ColemanMicrosoft's executive vice president, explaining the rationale behind the job cuts and restructuring.

The restructuring will lead to four studios leaving Xbox's direct purview. Compulsion Games and Double Fine Productions will become independent entities, retaining their intellectual property. Ninja Theory and Undead Labs are set to be acquired by new owners who will fund their current projects. In France, Arkane's management is consulting with its Works Council regarding potential strategic options, which could lead to further closures or a sale.

History is full of companies that mistake longevity for inevitability. We will not be one of them.

— Asha SharmaXbox CEO, communicating the need for adaptation and growth to employees.
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Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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