Significant Xbox layoffs imminent, perhaps another studio closure as well

[iamthemilkman]

Microsoft’s Xbox division will be hit with significant layoffs next month, according to people familiar with Microsoft’s plans.

The company has been preparing for the layoffs internally for weeks, with Xbox CEO Asha Sharma hinting about “making hard choices” last month. Sources suggest the cuts could even involve a studio closure, or changes to the Xbox studio lineup. In a recent Giant Bomb episode, rumors of 1,000 layoffs for Microsoft’s Xbox division were mentioned. Bloomberg also reported today that the cuts would be “major,” and involve budget cuts for marketing and other areas of Microsoft’s Xbox business.

Moments before Bloomberg’s report, Xbox CEO Asha Sharma and chief content officer Matt Booty sent a memo to Xbox staff, warning of an “Xbox reset” over the next 100 days. Sharma and Booty pointed to difficult challenges the business is facing. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time,” they wrote. “Going forward, this cannot continue.”

They also noted that “we are in a hardware component crisis,” saying that component costs for the 2027 holiday season are expected to be “over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory.” They said that “we need a new business model and partnerships for hardware as we remain committed to Helix.”

Sharma and Xbox strategy chief Matthew Ball have been hinting at “radically different” console business models this week, and the mention of “partnerships for hardware” certainly plays into the idea that other PC OEMs might be able to create Xbox-branded devices based on AMD’s new chips in the future.

But right now, Xbox’s “current platform infrastructure is not built for the battle ahead,” Sharma and Booty wrote, saying that “we’ll evolve and rebuild our stack and look at capabilities across all of XBOX and potential M&A to help us win in hardware, PC, mobile, and streaming.”

Sharma has already made some big decisions since taking over, including making Gears of War: E-Day and Clockwork Revolution Xbox console exclusives.

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[Nebulon_Galaxy]

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I cant read this without 3 other things happening at the same time

Can you please add something like this next time

 

[Lena CE]

I kind of want to do the math on how many studios and employees were acquired during Microsoft's insane studio buyout rush a few years back vs how many studios have been shut down and people laid off since then.

In any case, with Microsoft its gonna get a lot worse before it gets any better. Halo 7 is still a ways off, Forza Motorsport is in a bad place and we're only just now seeing release windows for games they announced 5-6 years ago. They're likely gonna use component shortages to try and push cloud again but in a more appealing way since "This is an Xbox" didn't work for most people. Forza Horizon 6 is just about the only thing they've released all decade that wasn't mostly a dud. Even something like Starfield was successful but not nearly to the extent they'd have expected from a Bethesda game.

 

[Luxfin]

I just want to ask, "What was the point of acquiring these studios if you're just going layoff the workers later anyway?"

 

[hormonemaximum]

I just want to ask, "What was the point of acquiring these studios if you're just going layoff the workers later anyway?"

consolidation + get ahold of intellectual property to speculate on later (get cheaper labor from external studio/smaller teams/outsourced development to work on game under crunch) this happened in the mid 2000's extensively as the PS3 era of consoles went on.

Post automatically merged: Today at 2:29 AM

shutter original studio, developers, talent. if IP is successful through speculation + investment, assign a team who's sole purpose is to make that one thing. nearly identical to the process thru which consolidation works in every other industry

 

[dkpopman]

Life must be stressful for those who only do Xbox stuff. They were just up then they're right back to taking losses.

 

[Don Patch]

I kind of want to do the math on how many studios and employees were acquired during Microsoft's insane studio buyout rush a few years back vs how many studios have been shut down and people laid off since then.

In any case, with Microsoft its gonna get a lot worse before it gets any better. Halo 7 is still a ways off, Forza Motorsport is in a bad place and we're only just now seeing release windows for games they announced 5-6 years ago. They're likely gonna use component shortages to try and push cloud again but in a more appealing way since "This is an Xbox" didn't work for most people. Forza Horizon 6 is just about the only thing they've released all decade that wasn't mostly a dud. Even something like Starfield was successful but not nearly to the extent they'd have expected from a Bethesda game.

Yes, and:

It seems like the game-plan has changed from the time they were running amok buying things up and now. It looks like the Disney approach to me; the value is in the I.P.'s, not the studios or people. MS, as well as the lion's share of Western media companies, seem content with sequestering and then selling the entire 20th century (and early 21st century) back to people. And... well, it seems like for the most part peeps are content with buying it.
The M.O. being "It won't make money unless it has already made money".
The overheads on development, R&D, and focus testing all drop like crazy. Fold in machine generated content, and it's "instant money".
MS intends on leasing access to customers with game pass. Or, at the very least, being in charge of the publishing.

So the studios mean next to nothing as long as they have the right to the thing the studio made.
Sad really. Saw this coming from miles away...


(Eek, sorry I typed so much, lol)

 

[Mal]

(Eek, sorry I typed so much, lol)

im sorry but your only option for atonement will be to commit sudoku:

rest in piece

 

[Tsukishima]

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Microsoft always struck me as the company who joined the 'creating a videogame console country club' for the shits and giggles. They're too rich to EVER care about profits or anything that serves the creative art. If they did, it was pure happenstance and the rare moments of striking gold without the conscious thought.

Comes a time where if studios are bought by Microsoft they should KNOW what they're getting into at this point if they accept the deal. Let's stop pretending there's not going to be a second rake to walk into when we've already slammed ourselves hard on the first one.

 

[SamanthaSamantha's icon]

I kind of want to do the math on how many studios and employees were acquired during Microsoft's insane studio buyout rush a few years back vs how many studios have been shut down and people laid off since then.

They seem to be borrowing from EA's (crap) playbook.

And nobody wins when that's a strategy people use.