Microsoft's Gaming Division Faces Imminent Mass Layoffs Amid Financial Struggles and Union Pushback

Rumor has it that Microsoft is preparing to enact mass layoffs across its gaming division this July, following multiple reports out of Bloomberg plus recent comments made by new Xbox CEO Asha Sharma and Chief Content Officer Matt Booty. The Communications Workers of America Union, which represents thousands of video game employees at Microsoft and beyond, is preparing to negotiate for employee protections, while calling for transparency from executives and demanding basic dignity for developers. Sharma and Booty laid the groundwork for layoffs in early June, with a memo marking the first 100 days of new Xbox leadership. "We have found ourselves over-extended as we executed on changing strategies in a landscape of more readily available content," the pair wrote. Including the hard-fought acquisition of Activision Blizzard King, which cost Microsoft $69 billion in 2023, Xbox spent more than $89 billion in investments and studio support over the past five years, while the segment's annual revenue declined by nearly half a billion dollars, the memo stated. "Going forward, this cannot continue," Sharma and Booty wrote, ominously. Bloomberg simultaneously reported that Xbox was planning substantial layoffs in July, right after the end of Microsoft's fiscal year. A few days later, reports emerged that Xbox was shuttering or selling off three of its studios, Double Fine, Ninja Theory and Compulsion Games. During a media call on June 29, CWA offered a clear message for Xbox leadership. "We're here to say this plainly: Those workers will not be treated as disposable," CWA District 9 Vice President Frank Arace said. He argued that "the money is there" to keep Xbox teams intact, but that executives are funneling it elsewhere with little care about the human or creative impact of layoffs. UVW-CWA treasurer Sherveen Uduwana agreed, noting that Microsoft just raised its console prices for the third time this year, and CEO Satya Nadella personally made $96 million in 2025. "There is no shortage of wealth in the games industry, especially if we're talking about Xbox, Sony, EA," Uduwana said, concluding that these multibillion-dollar organizations are choosing to not support their developers. CWA represents roughly 3,500 workers across the video game industry and its membership numbers continue to grow. In 2023, roughly 300 QA workers at Microsoft subsidiary ZeniMax Online voted to unionize, forming the largest video game union at the time. Their contract with Microsoft was ratified in June 2025, including minimum salary requirements, a framework for wage increases and protections regarding the use of AI. Multiple studios across Xbox have followed suit, including Raven Software and several teams under the Blizzard umbrella, including Overwatch and Diablo workers. Today, CWA is calling for Xbox executives to sit at the negotiating table in good faith, and respond to workers' demands for transparency, support and job security. Four Xbox employees and CWA members shared their experiences working under a latent threat of sudden layoffs and studio closures. Elder Scrolls Online encounter designer Morgan Goin lost years of accrued benefits when Xbox suddenly closed Arkane Austin and then waited a month before transferring some developers to ZeniMax. Even when teams hit their metrics and executives gushed over their games, Xbox canceled projects and shook up studios without warning, Goin said. Blizzard story editor and franchise developer Alison Veneto said that with each round of layoffs, affected studios lose incredible talent and also years of institutional knowledge. She added that it's difficult to be creative with layoffs constantly looming and no defined rules dictating how mass firings should play out. "Work with us," Veneto said, speaking directly to Microsoft. "Adopt meaningful layoff protections." A common refrain was that Microsoft has shown little interest in actually negotiating with its unions, failing to give proper attention to meetings and leaving proposals on the table for months at a time. Unions representing workers at ZeniMax and other Microsoft studios have successfully won certain protections for all Xbox developers, but the basic framework around layoffs and studio closures still requires serious, good-faith attention, according to CWA. "We're done paying for executives' failures," Activision QA tester Andrew Snell said.