Microsoft has confirmed a new round of layoffs within its gaming division, as reported by PCMag. While the tech giant did not disclose the exact number of employees affected, it described the layoffs as “very small.” These cuts are separate from the performance-based reductions announced last week. Despite the downsizing, Microsoft maintains its commitment to the gaming industry, boasting over 500 million monthly players across Xbox, PC, and mobile platforms.
Concerns Over Impact on Acquired Studios
The layoffs have raised concerns about potential impacts on staff at Activision or Bethesda, two major studios that Microsoft acquired in 2021 for $75.4 billion and $7 billion, respectively. However, it remains unclear which teams are specifically affected. Microsoft’s recent decisions to shut down smaller studios, such as Arkane Austin and Tango Gameworks in May, highlight ongoing challenges within the industry.
The video game sector has been grappling with mass layoffs for years. According to Phil Spencer, CEO of Microsoft Gaming, the industry faces a “growing crisis” due to underperforming or canceled titles, mounting economic pressures, and the lingering effects of the COVID-19 pandemic. Despite these challenges, Microsoft insists it is still “all in on gaming.”
“Organizational and workforce adjustments are a necessary and regular part of managing our business,” said a Microsoft representative.
“We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners,” the representative added.
Microsoft’s gaming business has not met its growth expectations in recent years. In the first half of last year, gaming revenue increased by only 5.8%, falling short of the projected 11%. The company once considered shutting down its Xbox gaming division in 2021 but opted instead to acquire larger game studios to bolster its Game Pass subscription service. This strategic decision aligns with Microsoft’s biggest game launch ever, Call of Duty: Black Ops 6, which significantly boosted new Game Pass subscriptions.
What The Author Thinks
Microsoft’s recent round of layoffs in its gaming division reflects a deeper trend within the gaming industry as it faces economic pressures, underperforming titles, and the residual impact of the pandemic. While the downsizing raises questions about the future direction of the company, especially concerning its newly acquired studios, Microsoft’s continued investment in Game Pass and major acquisitions suggests a strategy geared towards long-term growth. The challenge now will be for Microsoft to navigate the growing crisis in the industry while maintaining its position as a leader in gaming innovation.
