Microsoft has announced plans to cut about 4,800 jobs, representing around two per cent of its global workforce, as part of a major cost-cutting and restructuring exercise affecting its Xbox gaming division.
According to AFP, the cuts include about 3,200 gaming jobs, making it one of the biggest overhauls in Xbox’s history.
The company also said four game studios would be spun off or sold, while another studio would undergo a review process that could lead to its closure.
The layoffs come as Microsoft continues to invest heavily in artificial intelligence, with major spending on AI-ready data centres and computing power.
“Our business is changing because the world around it is changing,” Microsoft’s Executive Vice President, Amy Coleman, said in a memo to employees.
“Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it,” she added.
Coleman said most of the job cuts would affect Microsoft’s commercial business and Xbox, but stressed that the roles were “not being replaced by AI.”
At Xbox, CEO Asha Sharma told employees that 1,600 positions would be cut immediately, while the remaining reductions would take place through the 2027 fiscal year.
Sharma described Xbox’s business as “not healthy,” saying its profit margins were “3-10 times lower” than those of its rivals.
“History is full of companies that mistake longevity for inevitability,” she wrote. “We will not be one of them.”
As part of the restructuring, Compulsion Games and Double Fine Productions will become independent studios, while Ninja Theory and Undead Labs are expected to join new owners with funding to continue their current projects.
In France, Arkane’s management has begun consultations over possible strategic options, a process that could result in a sale or further closures.
