Microsoft Cuts Gaming Jobs, Xbox Chief Confirms

Microsoft's gaming division underwent significant layoffs today, according to an internal memo from Xbox head Phil Spencer obtained by IGN.

A source informed IGN that Candy Crush studio King was heavily impacted, though the workforce reductions extend across other gaming units. IGN has learned that certain teams within Microsoft-owned Bethesda, including its London office, were also affected. Additionally, Rare's long-anticipated Xbox exclusive, Everwild, has been canceled as part of these cuts.

These gaming industry layoffs form part of a broader, sweeping round of cuts at Microsoft, eliminating approximately 4% of its global workforce, or about 9,100 positions. Microsoft employs over 228,000 people worldwide.

In his memo, Spencer did not specify further details, informing staff that "any organizational changes will be communicated by your team leaders in the coming days."

The following message from Phil Spencer was distributed to all gaming staff today:

Today we are announcing difficult decisions that affect colleagues across our organization. To ensure Gaming's long-term success and concentrate on strategic growth priorities, we are halting or scaling back certain business activities. We are also aligning with Microsoft's company-wide initiative to streamline management structures, enhancing our agility and operational effectiveness. Out of respect for those affected today, specific notification details and any organizational adjustments will be provided by your team leaders in the near future.

I acknowledge that these changes occur at a time when our player base, game portfolio, and engagement hours are at record highs. Our platform, hardware, and game pipeline have never been more promising. Our current success stems from difficult choices made in the past. To sustain this momentum for years to come, we must now make decisive choices, focusing our resources on the most promising opportunities. We will continue to nurture our thriving areas and direct our efforts toward the highest-potential initiatives, all while meeting the company's performance expectations. This focused strategy ensures we can deliver outstanding games and experiences for players now and in the future.

While prioritizing our strategic opportunities is critical, it does not diminish the gravity of this announcement. Simply put, our current position would not be possible without the immense time, energy, and creativity of those whose roles are now impacted. These decisions are in no way a reflection of the talent, innovation, and commitment of the individuals involved. Our positive trajectory is not accidental—it is the direct result of our teams' dedicated work over many years.

Our HR team is working directly with affected employees to provide severance benefits compliant with local regulations, including compensation, continued healthcare, and career transition support to aid their next steps. Employees whose roles have been eliminated are strongly encouraged to apply for open positions within Microsoft Gaming, where their applications will receive priority consideration.

We extend our sincere gratitude to everyone who has contributed to our culture, our products, and our community. We move forward with profound appreciation and respect for all who have been part of this journey.

Phil

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Microsoft employees who spoke to IGN on condition of anonymity to protect their positions indicated that staff had been anticipating these layoffs, preparing for a worst-case scenario.

Microsoft has implemented numerous workforce reductions in its gaming division since its $69 billion acquisition of Activision Blizzard. The company cut 1,900 jobs in January 2024, followed by further layoffs just months later that led to the closure of Arkane Austin, developer of Redfall, and Tango Gameworks, developer of Hi-Fi Rush. In September 2024, Microsoft eliminated an additional 650 roles from its gaming business. Then, in May of this year, Microsoft cut a staggering 6,000 employees, representing 3% of its total workforce. Today's announcement marks the fourth major round of layoffs to impact Microsoft's gaming operations in the last 18 months.

In a June 2024 interview with IGN, Xbox leader Phil Spencer stated: "I am responsible for operating a sustainable and growing business within the company, which sometimes requires making difficult decisions—choices I do not take lightly, but which are necessary for our long-term health."

These workforce reductions follow Microsoft's recent confirmation of plans for next-generation Xbox consoles and its prominent presence at the gamescom trade fair.