Layoffs have started (again) at Microsoft, with CNBC reporting that the company will lay off around 9000 people. Many of those cuts are expected to hit Xbox, as first reported by Bloomberg.
Bloomberg reported this morning that Candy Crush maker King, based in Barcelona, is losing 10% of its staff, or around 200 people. Bloomberg also reported cuts to other European ZeniMax offices. IGN reports that Bethesda, including its London office, will be affected. US cuts are expected; a memo to gaming staff from Phil Spencer published by IGN says that “the specifics of today’s notifications and any organizational shifts will be shared by [Microsoft] team leaders in the coming days.” According to Game File, Microsoft says the cuts at Xbox are less than half of the overall layoffs at Microsoft.
As information about those affected spreads across the company, several in-development projects have reportedly been cancelled, including Rare's Everwild and an MMORPG from ZeniMax Online Studios. Perfect Dark studio The Initiative has been closed.
The Verge reports that layoffs have affected Xbox's user research team, and that the product lead for Xbox's Family and Child Safety has been let go. The Verge also reports layoffs at Forza Motorsport developer Turn 10. Jason Schreier reports layoffs at Call of Duty studio Raven, and Kotaku reports layoffs at State of Decay studio Undead Labs. Layoffs have also hit the Warcraft Rumble team.
Spencer writes in his memo, “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.”
Spencer goes on, in classic tone-deaf executive style, to praise Xbox for having “more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger.” He writes
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.
You’d be forgiven for being confused that Microsoft sees the need for more layoffs, given the company’s decision to lay off over 6000 people in May. And you might wonder how the company could see the need for more gaming-specific layoffs, given the multiple rounds of layoffs Xbox has seen over the last few years. In January 2024, Xbox cut around 2000 people primarily at Activision Blizzard, following the completion of Microsoft’s acquisition of the company in October 2023. In May of that year, Microsoft closed four Bethesda studios in Arkane Austin, Alpha Dog Studios, Tango Gameworks, and Roundhouse Games. The company laid off an additional 650 people in September.
Microsoft has seen an explosion of unions at the company in the wake of all this. QA workers at Zenimax reached a contract agreement in May after nearly two years of bargaining. Workers at Bethesda unionized in July 2024, quickly followed by workers at World of Warcraft, and Zenimax Online Studios unionized in December of that year. These unions have been able to form due to a labor neutrality agreement Microsoft signed with the Communications Workers of America in 2022, though that hasn’t stopped the company from dragging its heels at the bargaining table. Still, the unions are one way Microsoft employees are fighting back against the company’s frequent, brutal cuts.
This is a breaking story and will be updated.
