Microsoft Announces Major Layoffs, Including Significant Cuts to Xbox Division
Quick Look
- Microsoft is cutting approximately 4,800 jobs, with a major overhaul impacting its Xbox gaming division.
- The company cited cost-cutting measures and a changing industry landscape as reasons for the layoffs, which will not be replaced by AI.
- Xbox consoles are also set to see price increases.
AI-generated summary
Why It Matters
Microsoft is implementing significant job cuts, including a major overhaul of its Xbox division, to reduce costs and adapt to a changing industry. The company also plans to increase the prices of its Xbox consoles.
Microsoft will cut some 4,800 jobs, including the largest overhaul in its gaming brand Xbox, the company said.
Approximately 3,200 jobs will be cut from the company's gaming operations in the coming fiscal year.
The move is meant to cut costs in the Xbox division, which has been struggling in recent years.
According to Microsoft's Amy Coleman, the company's executive vice president, the jobs that will be cut will not be replaced by AI, despite accepting the role automation has across the company.
"Our business is changing because the world around it is changing," Coleman wrote in a memo to Microsoft employees, adding that companies do not choose whether their industry changes, but they rather "only get to choose whether they change with it."
Console prices to rise
Explaining the move, CEO of Microsoft's Xbox brand Asha Sharma called the division's business "not healthy."
Sharma was appointed CEO in February, promising to return it to growth by 2027.
According to Sharma, Xbox will not become one of the companies that "mistake longevity for inevitability."
Since its acquisition of Activision Blizzard in 2024 for $68.7 billion (€60 billion), Xbox has gone through several rounds of cuts.
The company will also follow its competitors Sony and Nintendo in raising Xbox consoles' prices due to the component-cost surge fueled by AI that affects the gaming industry.
Edited by: Wesley Dockery
What to Watch
AI outlook — possibilities, not facts
Xbox console prices will increase globally.
Likely · Short term
Open Questions
- What specific roles are most affected by the AI automation?
- What is the projected impact on Xbox's market share?
- Will other gaming companies follow suit with price increases?
