Microsoft is cutting 3,200 jobs as part of a major restructure of its Xbox division, with 1,600 roles eliminated immediately. The move will see four gaming studios depart the company, including South of Midnight developer Compulsion Games and Psychonauts developer Double Fine Productions, which will transition to independent studios.
Xbox boss calls restructure 'significant' and 'painful'
Xbox boss Asha Sharma described the changes as the most “significant” restructure in the console maker’s history. In an email to staff, she said the gaming business “is not healthy” and that the decisions were necessary for future growth. Sharma noted that the company is operating at margins 3–10 times lower than comparable platform and publishing businesses, and that in a typical year, Microsoft lost 64 cents for every dollar invested in studios.
“I know this is painful,” Sharma wrote. “These changes will directly affect people who have poured their creativity into building Xbox. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved Xbox. Today’s decisions do not reflect their talent or dedication.”
Four studios to leave Microsoft
Compulsion Games and Double Fine Productions will become independent studios. Hellblade maker Ninja Theory and State of Decay developer Undead Labs “have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3,” Sharma said. Another studio is now in consultation over its future.
Job cuts are also affecting other parts of Xbox, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. However, no first-party publicly announced games have been cancelled, meaning titles like Fable, Gears of War: E-Day, Clockwork Revolution, Call of Duty: Modern Warfare 4, Minecraft Dungeons 2, and The Elder Scrolls 6 remain on track for release.
Management layers to be reduced
Sharma said the company aims to reduce management layers from as many as 14 to no more than five, and where possible, three. “We know that great technology gets better when it gets simpler, not bigger,” she stated. “These changes are about a bigger future for Xbox, not a smaller one.”
The cuts follow last July’s round of layoffs at Microsoft, when 9,000 jobs were cut across the entire business. That round saw several games cancelled, including Rare’s Everwild, and studios shut down, such as Perfect Dark developer The Initiative.
Sharma emphasized that despite the cuts, Microsoft will invest as much in Xbox this year as ever, but with “greater focus, greater discipline, and greater clarity, all in service of making Xbox where the world plays and creates.”
