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Xbox Axes Studios, Slashes 1,600 Jobs Amid AI Shift
6 Jul
Summary
- Microsoft cut 1,600 Xbox jobs, with more layoffs planned.
- The company acknowledged misreading economic challenges in gaming.
- Microsoft is prioritizing AI investments over the Xbox division.
Microsoft announced sweeping changes to its Xbox operations on Monday, including the layoff of 1,600 employees and the discontinuation of several game studios. An additional 1,250 roles will be eliminated over the next year. These cuts are part of a larger reduction of 4,800 jobs across Microsoft, reflecting a strategic reallocation of resources towards artificial intelligence infrastructure.
Company executives acknowledged miscalculations regarding economic challenges in the video game sector. Asha Sharma, Xbox's chief executive, noted that platform teams had grown disproportionately large compared to player engagement. The company aims to simplify operations and make Xbox a sustainable business, despite past multi-billion dollar acquisitions like Activision Blizzard for $69 billion.
Some studios, such as Double Fine and Compulsion Games, may become independent, retaining their franchises. Undead Labs and Ninja Theory are slated for sale. Microsoft's intensified focus on AI drives the need for substantial capital expenditures on data centers and infrastructure, estimated at $190 billion this calendar year. This strategic redirection impacts workforce priorities and operational structures.
