Microsoft's Xbox to lay off thousands of employees
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Why is Microsoft cutting 20% of Xbox staff this year?
Time now for our daily tech and business report. Today we're joined by Bloomberg reporter Jason Schreier. Microsoft's Xbox plans to cut twenty percent of its staff over the course of the next year. Totaling roughly thirty two hundred workers. Today, sixteen hundred Xbox workers are getting laid off. Jason, thanks so much for being with us this afternoon. What is prompting these layoffs?
Hi, Margie, thanks so much for having me. So what happened was Xbox, the gaming division of Microsoft, got a new CEO in February named Asha Sharma, and she came in, looked at the state of the business, said, Hey, this thing needs to be turned around. Um, the company had expanded a great deal over the last few years, but had not seen revenue growth to correspond with that uh personnel. growth and this is kind of the first big step in Sharma's plan to do what she calls a reset of Xbox's business and try to return the company to growth.
Okay, so you're gonna grow by cutting?
How is new CEO Asha Sharma planning to reset Xbox’s business?
Yeah, classic, classic uh corporate corporate business strategy, right? So yes, I mean what she is doing here is she is making cuts all around. Um she has said that this is part of a plan to um refocus the company on some of its biggest franchises, its biggest games, and double down on those as well as streamline cut uh layers of management. And do some of the other things kind of a classic new CEO coming in and wanting to put their stamp on the business.
Okay. So what games are gonna be sticking around and what games are gonna be going away?
Yeah, so as far as games, they're not really canceling any projects. This is mostly a personnel um sort of cut. Uh that said, there are some subsidiaries within the Xbox organization, game studios, that are going away. There are four of them with a fifth to come. And two of them, including one in San Francisco called Double Find Productions, um, two of them are going independent. And another two are getting sold.
Which Xbox studios and subsidiaries are being shut down, sold, or spun off?
And then a fifth one in France called Arcane is actually going to go through a long um kind of negotiation process that is required by French labor law. So we're seeing the company part ways with with some of those subsidiaries that were making games for it.
I I don't wanna put you on the spot but I'm gonna just go throw out the question. If you know it, you know it. If you don't, you don't. Uh we've got the two um Bay Area campuses, San Francisco and Mountain View. Are any employees being affected there?
Yeah, Xbox is actually largely so the Xbox kind of as an organization, um, the centralized part of it, not the studio part of it, they are mostly in Redmond, uh, Washington. That is where um most of those layoffs are happening. But as I mentioned, I mean they did have the studio Doublefine that is located in downtown San Francisco. I wish I remembered, I think it's Brennan Brennell Street. I don't remember the exact name of the street, Brennan.
Are Xbox employees in Bay Area campuses affected by the layoffs?
Um, but they have an office and a very nice office in downtown San Francisco and they are now g returning to independence. They were an independent studio for a very long time for about eighteen years. Then they were purchased by Microsoft in two thousand nineteen and now they are returning to independence. So um they will not be shutting down but they will be looking a little bit different.
And is there an AI role here at all?
Um, I think there's an AI role in the sense that Microsoft as an organization, like many big tech companies, is refocusing a lot of its resources on AI. Um, but Xbox as a business has been facing issues for a while, really since before the rise of LLMs and generative AI. Um and I think this is more about turning that around. But of course it's within the broader context of Microsoft wanting to invest as much as possible in AI. And then of course there's one more element, which is that Xbox is in addition to a game maker, they are a hardware maker. And their hardware, just like most gaming hardware, all gaming hardware, has been drastically impacted by the memory shortage that AI has been causing. In fact, Asha Sharma wrote in a memo a few weeks ago that
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Chapters
6 chapters
1
Why is Microsoft cutting 20% of Xbox staff this year?
0:00–1:00
2
How is new CEO Asha Sharma planning to reset Xbox’s business?
1:00–2:00
3
Which Xbox studios and subsidiaries are being shut down, sold, or spun off?
2:00–2:49
4
Are Xbox employees in Bay Area campuses affected by the layoffs?
2:49–3:55
5
What role does AI and memory shortages play in Xbox’s challenges?
3:55–4:36
6
How important is Xbox to Microsoft’s overall revenue and strategy?
4:36–5:54
Speakers
1 identifiedMore from KCBS Bloomberg Tech and Business Report
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