Microsoft Slashes 4,800 Jobs in Gaming Division Reset

Microsoft announced on Monday that it is eliminating 4,800 jobs, representing approximately 2.1% of its global workforce. A significant portion of these layoffs, totaling 1,600 positions, will affect the Xbox video game business. This move is part of a broader reorganization aimed at "resetting" Xbox in response to intense competition and declining profitability within the gaming industry.

In a memo, Xbox CEO Asha Sharma stated that the division's current business "is not healthy," citing operating margins that are "3-10x lower than comparable platform and publishing businesses." Sharma highlighted a severe "hardware crisis" in the industry, characterized by soaring costs for console components, which impacts competition against rivals like Sony's PlayStation and Nintendo's Switch. She indicated that an additional 1,600 job cuts are anticipated throughout the current fiscal year.

Beyond the direct Xbox workforce reductions, Microsoft is also spinning off four video game development studios that were previously acquired. These gaming-specific layoffs are separate from other Microsoft-wide job cuts, which Chief People Officer Amy Coleman attributed to evolving customer needs. Coleman clarified in a blog post that the eliminated roles "are not being replaced by AI." These workforce reductions follow voluntary buyouts offered to around 8,750 employees in May, with over 30% of eligible workers accepting those offers.