Breaking News
Microsoft is cutting 4,800 jobs, or about 2.1% of its global workforce, as it restructures its Xbox gaming business, spins off several game studios and seeks to improve returns following years of heavy investment in gaming.
The restructuring will eliminate 3,200 jobs from Microsoft's gaming division, including 1,600 layoffs announced Monday. The company is also divesting or spinning off multiple Xbox studios as part of the overhaul.
The move comes despite Microsoft's multibillion-dollar push into gaming, including its acquisition of Activision Blizzard. While the deal significantly expanded Microsoft's gaming portfolio, Xbox has continued to trail Sony's PlayStation and Nintendo in the console market.
In a note to employees, Xbox chief Asha Sharma said Microsoft will divest four studios as part of the restructuring. South of Midnight developer Compulsion Games and Psychonauts creator Double Fine Productions will become independent studios, while Ninja Theory and Undead Labs will be spun off to focus on the Senua and State of Decay 3 franchises, respectively.
Sharma also said Arkane Studios, which developed Dishonored and is currently working on a game based on Marvel's Blade, has begun consultations with its workers' union in France to review strategic options.
The restructuring reflects Microsoft's evolving gaming strategy, which has increasingly focused on making Xbox titles available across multiple platforms instead of relying primarily on console-exclusive games to drive Xbox hardware sales.
The job cuts also come as major technology companies face mounting pressure to generate returns from massive investments in artificial intelligence infrastructure.
In a memo to employees, Chief People Officer Amy Coleman said the layoffs were not being driven by AI replacing workers.
"The roles eliminated today are not being replaced by AI," Coleman said. "At the same time, what is true is that AI is changing how work gets done."
Microsoft had earlier this year offered voluntary buyouts to roughly 7% of its U.S. workforce, or about 9,000 employees. The company has historically announced workforce reductions around the end of its fiscal year as it resets spending priorities.
The latest cuts come as Microsoft continues to expand its AI infrastructure. Strong demand for Azure cloud services has supported revenue growth, but the company is also spending heavily on data centres and AI capacity. In April, Microsoft projected $190 billion in capital spending for 2026, well above market expectations, as it ramps up AI investments.
The company is also facing pressure in its gaming hardware business. Rising memory chip prices—driven by demand from AI data centres—have increased manufacturing costs, prompting Microsoft to raise Xbox console prices even as demand for the devices remains subdued.
Microsoft is expected to report its quarterly financial results later this month.
The restructuring will eliminate 3,200 jobs from Microsoft's gaming division, including 1,600 layoffs announced Monday. The company is also divesting or spinning off multiple Xbox studios as part of the overhaul.
The move comes despite Microsoft's multibillion-dollar push into gaming, including its acquisition of Activision Blizzard. While the deal significantly expanded Microsoft's gaming portfolio, Xbox has continued to trail Sony's PlayStation and Nintendo in the console market.
In a note to employees, Xbox chief Asha Sharma said Microsoft will divest four studios as part of the restructuring. South of Midnight developer Compulsion Games and Psychonauts creator Double Fine Productions will become independent studios, while Ninja Theory and Undead Labs will be spun off to focus on the Senua and State of Decay 3 franchises, respectively.
Sharma also said Arkane Studios, which developed Dishonored and is currently working on a game based on Marvel's Blade, has begun consultations with its workers' union in France to review strategic options.
The restructuring reflects Microsoft's evolving gaming strategy, which has increasingly focused on making Xbox titles available across multiple platforms instead of relying primarily on console-exclusive games to drive Xbox hardware sales.
The job cuts also come as major technology companies face mounting pressure to generate returns from massive investments in artificial intelligence infrastructure.
In a memo to employees, Chief People Officer Amy Coleman said the layoffs were not being driven by AI replacing workers.
"The roles eliminated today are not being replaced by AI," Coleman said. "At the same time, what is true is that AI is changing how work gets done."
Microsoft had earlier this year offered voluntary buyouts to roughly 7% of its U.S. workforce, or about 9,000 employees. The company has historically announced workforce reductions around the end of its fiscal year as it resets spending priorities.
The latest cuts come as Microsoft continues to expand its AI infrastructure. Strong demand for Azure cloud services has supported revenue growth, but the company is also spending heavily on data centres and AI capacity. In April, Microsoft projected $190 billion in capital spending for 2026, well above market expectations, as it ramps up AI investments.
The company is also facing pressure in its gaming hardware business. Rising memory chip prices—driven by demand from AI data centres—have increased manufacturing costs, prompting Microsoft to raise Xbox console prices even as demand for the devices remains subdued.
Microsoft is expected to report its quarterly financial results later this month.
See What’s Next in Tech With the Fast Forward Newsletter
Tweets From @varindiamag
Nothing to see here - yet
When they Tweet, their Tweets will show up here.
