Microsoft initiates major reform in the gaming industry: Xbox to lay off thousands of employees

Tech giant Microsoft has announced the largest structural changes in the history of its gaming division, Xbox. The company plans not only to lay off thousands of employees but also to sell or spin off four major game studios into independent management. This move is attributed to intensifying competition in the global gaming market and a failure to meet projected financial targets. This is reported by news source.

According to ixbt.com, the planned restructuring will result in a total of 4,800 job cuts, 1,600 of which are directly within the Xbox division. In a memo to staff, Xbox head Asha Sharma confirmed that the division's headcount will be reduced by nearly 15% by July 2027. This process will also affect major brands such as Activision, Bethesda/ZeniMax, Blizzard, and Mojang.

The fate of the studios and new owners

The most sensational part of the reforms is the departure of four well-known studios from Microsoft. Specifically, Double Fine Productions and Compulsion Games will return to independent management. Their founders, Tim Schafer and Guillaume Provost, will take control of their teams and continue projects independently. The studios will retain their intellectual property and game catalogs.

Additionally, agreements have been reached for the sale of Ninja Theory, creators of the Hellblade series, and Undead Labs, the author of State of Decay. The new owners will take responsibility for completing anticipated projects such as Senua and State of Decay 3. The future of the Arkane studio, which is working on the Blade game, remains in question; its fate will be decided after several months of consultation.

Financial crisis and strategic shift

Asha Sharma noted that these drastic measures were caused by the deteriorating financial performance of the Xbox division. It is reported that the division's profitability was 3–10 times lower than that of other competing platforms. Microsoft had previously bet heavily on Game Pass subscriptions and massive studio acquisitions, but these areas failed to show the expected growth rates.

According to analysts, Xbox was losing an average of 64 cents for every dollar invested. Microsoft now intends to focus on quality over quantity. The company will concentrate on developing its largest game franchises and platforms. Mojang, the creator of Minecraft, and King, the author of Candy Crush, will now report directly to Asha Sharma, as they have already become independent platforms with massive audiences.

For gamers and industry professionals in Uzbekistan, this news may come as a surprise, as many projects developed by Xbox studios are popular in our region as well. Nevertheless, Microsoft promises that no announced game projects will be canceled and that all obligations will be fulfilled.