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.
Today we are sharing decisions that will impact colleagues across our organization. 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. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.”
– Phil Spencer, CEO of Gaming at Microsoft
“I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. 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. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.
Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.
HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.
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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