Microsoft begins deep job cuts across Xbox division

Microsoft’s gaming division began informing employees of job cuts on Wednesday (Jul 2) morning, part of a broader culling at the software company as it seeks to control costs.

Microsoft’s Stockholm-based King division, which makes Candy Crush, is cutting 10 per cent of its staff, or about 200 jobs, according to people familiar with the plans. Other European offices, such as ZeniMax, also began informing employees that job cuts were happening, said the people, who asked not to be identified because they were not authorised to speak to the press.

US units were expected to be told later on Wednesday how many jobs would be cut at each office. Microsoft’s gaming division had about 20,000 employees as of January 2024.

Microsoft announced on Wednesday morning it is eliminating 9,000 workers companywide in a second wave of layoffs this year. The cuts will have an impact across teams, geographies and tenure and are made in an effort to streamline processes and reduce layers of management, a company spokesperson said. The terminations follow an earlier round of layoffs in May that hit 6,000 people and fell hardest on product and engineering positions.

“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,” Microsoft Gaming chief executive officer Phil Spencer said in an email to staff seen by Bloomberg News.

Spencer did not share specific numbers but said that impacted employees will be “given priority review” if they apply to open jobs elsewhere within the company. He wrote that the company’s “platform, hardware, and game roadmap have never looked stronger” but that “we must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritise the strongest opportunities.”

Employees had been bracing for the job cuts since May, when Microsoft began conducting companywide layoffs and speculation mounted that the gaming division might be impacted. Many staff learnt last week through a Bloomberg report that the cuts were imminent.

This is the fourth mass layoff at Xbox in the last 18 months. The gaming division has been under pressure from Microsoft executives to boost profit margins since purchasing Activision Blizzard for US$69 billion in a deal that closed in October 2023.

Bloomberg earlier reported that Microsoft was planning to cut thousands of jobs this month, including many within the Xbox division. BLOOMBERG