Xbox sets billion-user goal as Microsoft prepares deep gaming cuts
Microsoft’s gaming division is planning thousands of layoffs and studio spinouts while its CEO says Xbox should reach more than a billion people a day.
By Hana Yoshida · Markets Reporter
2 min read
Microsoft is cutting deeply into its Xbox operation while setting an expansive audience target for the gaming business. The moves matter because the company is reducing staff and shedding studios even as Xbox leadership says it wants to reach more than a billion people daily, according to The Verge.
Xbox CEO Asha Sharma described the changes in a memo as “the most significant restructure in Xbox history,” The Verge reported. In the same message, Sharma wrote that she wants Xbox to become one of the few companies that “entertains more than a billion people each day” while giving people the chance to create and connect.
The Verge reported that Xbox plans to lay off 1,600 workers this summer. Another 1,600 cuts are expected over the next year, according to the report.
The reductions are part of a wider Microsoft restructuring, The Verge said. The publication also reported that Microsoft is laying off 4,800 employees overall, with the gaming division facing a particularly heavy impact.
Studios to leave Xbox
Microsoft is also spinning out four Xbox-owned studios as independent developers, according to The Verge. The studios are Double Fine, Compulsion Games, Undead Labs and Ninja Theory.
Those teams had been acquired over time in part to strengthen Game Pass, Microsoft’s subscription gaming service, The Verge reported. Their move outside Xbox suggests a change in approach for the company’s gaming division, though The Verge said the new direction is not yet clear.
The spinouts mark a notable shift for studios that had become part of Microsoft’s first-party development group. Double Fine, Compulsion Games, Undead Labs and Ninja Theory each had been housed inside Xbox before the reported restructuring.
A larger goal with a smaller team
Sharma’s stated billion-person goal sits alongside the planned cuts, creating a sharp contrast in the company’s near-term actions and long-term ambition. The Verge characterized the target as highly difficult given the size of the layoffs and the state of the video game industry.
The Verge also reported that Microsoft has spent billions of dollars on gaming while Xbox has struggled to show clear results from that investment. The planned job cuts and studio changes now put additional pressure on Xbox to explain how it will grow its audience with fewer internal resources.
For workers, the most immediate issue is the scale and timing of the layoffs. For players and developers, the larger question is what Microsoft wants Xbox to be after a restructuring that affects staffing, studio ownership and the role of Game Pass.
This story draws on original reporting from The Verge.