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Xbox Hit by New Wave of Layoffs as Microsoft Begins to Restructure their Gaming Division

Microsoft is rolling out another round of layoffs across several Xbox divisions, with employees from Activision’s King team and Bethesda’s ZeniMax marketing group among the first affected. Xbox head Phil Spencer shared the news in a company-wide email, explaining that the changes are meant to help the gaming division stay focused on key growth areas and operate more efficiently. He said these tough decisions are necessary to ensure long-term success, even as Xbox sees strong growth in players, games, and engagement.

Phil Spencer stated that the layoffs are not a reflection of the skills or commitment of those affected, acknowledging their vital role in Xbox’s current success. However, he explained that Microsoft must now prioritize its most promising growth areas to stay competitive in the long term.

To assist those impacted, Microsoft is offering severance packages, healthcare benefits, and job placement support. Affected employees are also being encouraged to apply for open roles within Microsoft Gaming, where their applications will receive priority. So far, no full studio closures have been confirmed.

Despite that, reports from Bloomberg and Windows Central suggest more layoffs are likely, especially within Xbox’s U.S. teams. While the current cuts are focused on European divisions, sources indicate this may be part of a broader restructuring plan still unfolding.

This marks the fourth significant wave of layoffs at Microsoft Gaming in the past two years. In January 2024, roughly 1,900 roles were cut, mainly at Activision Blizzard King. Then in May, three ZeniMax studios—including Arkane Austin and Tango Gameworks—were shut down, though Tango was later acquired and revived by Krafton. Another 650 jobs were eliminated in September, again primarily from Activision Blizzard King.

What do you think these layoffs mean for the future of gaming at Xbox? Let us know in our Xbox Chat Channel in Discord.

Source: Microsoft continues Xbox layoffs, with jobs cut at King and ZeniMax Media — read Phil Spencer’s note to staff on Windows Central

Source: Microsoft Begins Deep Job Cuts Across Xbox Division on Bloomberg

Featured Image Source: Xbox.com


Corey Dirrig is the Founder and President of Boss Rush Media. He is the host of The Boss Rush Podcast, Nintendo Pow Block, Tower Casuals: The Destiny Podcast, and cohosts a variety of other podcasts and content. You can follow Corey on Bluesky, on X/Twitter, and on Instagram or connect with him on LinkedIn for Business Inquiries.


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