Xbox Restructuring: 3,200 Layoffs, 4 Studios Leaving for New Management

Microsoft has announced a massive restructuring effort within its Xbox division, resulting in 3,200 staff layoffs across the current financial year. The layoffs, which include 1,600 roles eliminated today, are part of a broader effort to revamp the company’s gaming business.

In an email to staff, Xbox boss Asha Sharma described the restructure as the most significant in Xbox history, stating that the company’s gaming business is ‘not healthy.’ The layoffs represent approximately one-fifth of Microsoft’s gaming staff.

Studios Leaving for New Management

Four studios are leaving Xbox to new management, including Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs. Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games.

Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.

Reductions Across Other Units

Reductions are also being made across other units, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. However, none of the company’s first-party publicly announced games or projects are being canceled as part of these reductions.

Microsoft has also announced that Mojang and King will now report directly to Asha Sharma. These two studios have increasingly become platforms and are the largest by monthly active players, bringing critical geographic, demographic, and differentiation to Xbox.

Simplifying the Organization

The company is also simplifying its organization by reducing management layers to no more than 5, and where possible, 3. This will be achieved through a flatter organization that is built around makers, player-coaches, and directly responsible individuals.

The company will also streamline its tools, with a cleaner code base, shared services, and 50% reduced vendor spend. This will help to reduce complexity and improve decision-making.

Establishing a Chief Operating Officer

For the first time, Xbox is establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to Asha Sharma.

Over nearly two decades at Xbox, Helen has helped build some of the company’s most important businesses, from Xbox Live to leading Mojang and the Minecraft franchise.

A Devastating Blow to the Gaming Industry

The layoffs and restructuring efforts are a devastating blow to the gaming industry, which has already been facing challenges in recent years. The industry is facing a severe hardware crisis, and companies are being forced to make tough decisions to stay afloat.

The impact of these layoffs will be felt across the industry, and it remains to be seen how the gaming landscape will change in the coming months and years.