Microsoft Corporation has announced the layoff of approximately 9,000 employees across its global operations with its Xbox gaming division bearing a significant portion of the cuts.
The move is part of a broader cost-control strategy as the technology giant adjusts priorities amid changing market conditions and recent large-scale acquisitions.
The company confirmed on Wednesday that the latest wave of terminations affects various teams, roles and geographies.
In May, the firm implemented an initial round of 6,000 layoffs, primarily targeting product and engineering functions.
Multiple subsidiaries under Microsoft Gaming, including major studios and offices in Europe and North America, were notified of the workforce adjustments.
Stockholm-based King, the developer behind the popular Candy Crush franchise, will cut approximately 200 jobs, representing about 10% of its staff, according to sources familiar with the matter.
Other operations, including ZeniMax, Raven Software, Sledgehammer Games, Halo Studios and Turn 10 Studios, have also begun reducing headcount.
In addition to job cuts, Microsoft has cancelled several long-standing game projects as part of its restructuring measures. Titles such as Everwild from UK-based Rare Studio, an original online game from ZeniMax Online Studios, and the planned reboot of Perfect Dark have all been scrapped. As a result, affected studios will implement further staff reductions.
In an internal communication, Xbox Game Studios Head Matt Booty described the closures and project cancellations as necessary steps to “adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape.”
Microsoft Gaming CEO Phil Spencer echoed the rationale, stating that the restructuring aims to position the division for long-term profitability and sustainable growth.
“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 wrote in an email to staff.
The gaming unit has faced mounting pressure to improve profit margins, particularly after Microsoft’s $69 billion acquisition of Activision Blizzard in October 2023. The purchase expanded Microsoft Gaming’s workforce to an estimated 20,000 employees as of January 2024.
However, with the integration still ongoing, leadership is under pressure to deliver higher returns and maintain competitiveness in the gaming market.
Employees impacted by the layoffs will receive priority consideration for other open roles within Microsoft, the company said. Despite the cuts, Spencer maintained that the company’s gaming portfolio remains robust.
“Our platform, hardware, and game roadmap have never looked stronger, but 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,” he added.
This week’s downsizing marks the fourth significant layoff within the Xbox division in the last 18 months, reflecting the company’s broader trend of operational streamlining.
Microsoft emphasized that the adjustments are designed to reduce management layers and enhance agility across its global business segments.
As the industry continues to face economic pressures and evolving consumer demands, Microsoft’s decision signals a cautious approach to cost efficiency while preserving its core gaming franchises and development capabilities.
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