Microsoft is preparing to implement another round of major job cuts within its Xbox gaming division, marking the fourth significant layoff in the unit over the past 18 months.
The layoffs are expected to begin as early as next week, coinciding with the company’s fiscal year-end on June 30.
This move is part of a broader company-wide reorganization aimed at improving profitability and streamlining operations following the $69 billion acquisition of Activision Blizzard in 2023.
Scope and Impact: Cuts Across Hardware, Studios, and Support
According to reports from Bloomberg and Windows Central, the layoffs will affect multiple teams within the Xbox ecosystem, including:
- Gaming hardware and software teams
- In-house game development studios
- Support and distribution units
- Sales operations, particularly in Central Europe
While the exact number of job losses remains undisclosed, sources familiar with the matter describe the cuts as “substantial”, with managers already briefed on the upcoming changes.
Microsoft Layoffs Context: A Pattern of Workforce Reductions
This latest round follows a series of layoffs that have reshaped Microsoft’s gaming business:
- January 2024: 1,900 jobs cut, primarily from Activision Blizzard King
- May 2024: Closure of three ZeniMax Media studios
- September 2024: 650 additional layoffs across Activision teams
- May 2025: 6,000 job cuts across engineering and product teams
These reductions reflect Microsoft’s ongoing efforts to consolidate operations, reduce costs, and restructure its gaming strategy in preparation for the next generation of Xbox consoles.
Strategic Drivers: Profitability and Market Realignment
Despite a 5% year-over-year increase in gaming revenue in Q1 2025—driven by titles like Call of Duty, Minecraft, and Xbox Game Pass—Microsoft executives are reportedly under pressure to boost profit margins.
The company is also re-evaluating regional operations, with some distribution functions in Europe expected to be scaled back or shut down entirely.
The restructuring is seen as a response to shifting market dynamics, including:
- Rising development costs
- Increased competition from Sony and Nintendo
- The need to integrate Activision Blizzard’s vast operations
- A pivot toward AI and cloud-based gaming services
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