Microsoft has begun a major restructuring of its Xbox business, laying off approximately 3,200 employees this financial year, with 1,600 let go today. The cuts are part of a broader reduction of 4,800 staff across the company, with Xbox and the commercial sales division bearing the brunt.
Four studios exit Microsoft
At least four developers are leaving Microsoft's ownership: Ninja Theory, Undead Labs, Double Fine, and Arkane Lyon. Ninja Theory has already been sold to an undisclosed buyer, with the announcement expected next year. Undead Labs has also found a new buyer, and State of Decay 3 will still be released. Double Fine will receive 'runway funding' from Microsoft to develop new games and seek new investors or publishers, according to Game File.
Arkane Lyon's fate remains unclear. Due to stronger French labour laws, the studio may be sold or allowed to go independent. The future of Marvel's Blade, currently in development at Arkane, depends on the outcome.
Focus on profitability
Current Xbox boss Asha Sharma confirmed the news in an Xbox Wire post, stating the Xbox business is not currently profitable. She implied that the acquisition spree started by former head Phil Spencer was a mistake. Sharma said the company is flattening management structures from up to 14 layers to a minimum of five, or even three. Veteran Xbox executive Helen Chiang will be promoted to chief operating officer, overseeing hardware, software, and services.
Sharma wrote: 'We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios.' She added: 'None of our first party publicly announced games or projects are being cancelled as part of these reductions.'
Future direction
The new focus is expected to centre on major franchises like Halo, Gears of War, Forza Horizon, Fallout, and The Elder Scrolls. Sharma concluded: 'These changes are about a bigger future for Xbox, not a smaller one. The next decade of gaming will be larger, more global, and more creative than anything we’ve seen before. This year, we’ll invest as much in Xbox as we ever have, but we’ll invest with greater focus, greater discipline, and greater clarity.'
Despite the cuts, Sharma reiterated the goal to entertain 'more than a billion people each day', a target that seems increasingly distant.
