Microsoft is making deep cuts across its Xbox and gaming divisions. Around 9,000 employees are being laid off across multiple studios.
This marks Microsoft’s largest round of layoffs since 2023, nearly 4% of its global workforce. Xbox CEO Phil Spencer sent a memo to affected studios, describing the layoffs as a strategic shift for the company.
“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.“
Multiple studios working on the Call of Duty franchise were hit with layoffs. Sledgehammer Games, High Moon Studios, and Raven Software all saw employees cut. Xbox is also cancelling numerous projects in development, including Rare’s Everwild and Zenimax Online’s unannounced MMORPG. The hardest hit studio so far is the complete closure of The Initiative, who were working on the Perfect Dark reboot.
Microsoft has been regularly laying off staff its gaming division over the last year. Early 2024 saw the closure of Arkane Austin and Tango Gameworks, creators of Redfall and Hi-Fi Rush respectively. More layoffs occurred in September 2024 and May of this year.
Despite the layoffs, Xbox has 40 gaming projects in development and is pushing ahead with development on next gen consoles. With all this corporate upheaval, it’s hard not to wonder what Xbox’s real plan is heading into 2026.
