Francis Onyemachi reports more layoffs expected:
Microsoft has laid 4,800 employees, with Xbox accounting for a large share. Amy Coleman, Microsoft executive vice president, revealed this in a memo to employees, noting that the tech giant needed to focus on areas that can deliver for customers amid a fast-changing industry.
“Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it,” she said.
While the company noted that it would not replace the lost roles with AI, Coleman acknowledged that “what is true is that AI is changing how work gets done.”
Asha Sharma, who recently took over as Xbox’s chief executive, said in a note to staff that this was the beginning of the most significant restructure in Xbox’s history.
She added that the sweeping layoffs would see more than 1,600 roles immediately cut at Xbox.
Sharma, in a note shared on the X app, said another 1,600 jobs would be lost in the coming year.
She added that four Xbox game development studios, Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs would also be spun off as part of the changes.
“These changes are about a bigger future for Xbox, not a smaller one,” Sharma said.
“History is full of companies that mistake longevity for inevitability. We will not be one of them.”
In 2024, Xbox culled more than 2,000 jobs and shut down four studios acquired before Microsoft’s blockbuster purchase of Call of Duty maker Activision Blizzard.
Meanwhile, Microsoft earlier disclosed that it would lay off as many as 9,000 workers as it doubles down on its multi-billion-dollar AI investments.
Sharma said that while she knew the cuts were painful, a reset was needed across Xbox’s content portfolio, platform and operations.
She added that, as part of the restructuring, Minecraft developer Mojang and Candy Crush developer King would now report directly to her.
On the commercial side, Microsoft said the changes would build on its previously announced $2.5 billion plans to embed 6,000 engineers within enterprise clients to accelerate AI adoption among customers.
The CEO told employees in a separate memo that 1,600 positions were being cut immediately, with the remaining reductions to take place through fiscal year 2027.
Xbox has gone through successive rounds of layoffs since Microsoft’s $68.7 billion acquisition of Activision Blizzard was completed in 2024 following a lengthy regulatory review over competition concerns.
