Microsoft cuts 20% of Xbox jobs in gaming reset
Xbox will cut about 3,200 roles and spin off four studios as Microsoft reduces staff and refocuses the unit on its console business.
By Sofia Marchetti · World Affairs Correspondent
3 min read
Microsoft’s Xbox division is cutting about 20% of its workforce, a reduction that will affect roughly 3,200 employees, Fortune reported. The move matters because Xbox is shifting resources back toward its flagship console business, which Fortune said accounts for 80% of the unit.
Xbox CEO Asha Sharma described the overhaul as the biggest restructuring in the division’s history, according to Fortune’s Sebastian Herrera. The cuts are part of a broader Microsoft workforce reduction announced Monday that is expected to affect about 2% of the company’s 228,000 employees, Fortune reported.
Sharma told Fortune the gaming division had taken on too many initiatives as it tried to grow. “In order to grow, we made a bunch of bets … and as we did that, we inherently didn’t focus on the core business,” she said.
The reorganization also includes spinning off four Xbox studios, Fortune reported. The report did not name the studios or give details on the terms of the separations.
Xbox narrows its priorities
According to Fortune, Sharma framed the layoffs and studio changes as a reset in how Xbox runs the business and decides where to invest. She said the division’s spending and staffing had become too spread out across competing priorities.
“The number one measure of your strategy is what you put your resources behind, and we simply spread ourselves too thin,” Sharma told Fortune.
The new plan puts the Xbox console back at the center of the division’s strategy, Fortune reported. That marks a return of attention to the product line that still makes up most of the business, even as Microsoft has made a range of gaming investments in recent years.
Fortune reported that the Xbox job cuts represent the largest share disclosed within Microsoft’s broader layoff plan. Microsoft’s companywide reduction, announced Monday, is expected to touch a smaller proportion of the overall workforce than the Xbox cuts.
Part of a wider Microsoft reduction
Microsoft employed 228,000 people before the announced reduction, according to Fortune. The companywide layoff plan is expected to affect about 2% of that workforce.
Within Xbox, the cuts are far steeper. Fortune reported that roughly one in five staff members in the division will be affected, based on the 3,200 jobs expected to be eliminated.
Sharma’s comments to Fortune point to a management decision to concentrate money, staff and attention on fewer parts of the gaming operation. The company is not only reducing headcount but also separating four studios from Xbox, according to the report.
Fortune reported that Sharma announced the restructuring as a change in how Xbox operates and invests. The division’s next phase, as described in the report, centers on the console business that remains its largest revenue driver.
This story draws on original reporting from Fortune.