Microsoft is cutting 4,800 jobs — roughly 2.1% of its global workforce — including 1,600 Xbox employees, with another 1,600 gaming cuts expected throughout the fiscal year. Xbox CEO Asha Sharma, who took charge earlier this year, described the division as financially unhealthy, operating at margins far below industry peers amid a hardware cost crisis. Microsoft is also spinning off four game studios. The sweeping restructuring follows its $69 billion Activision Blizzard acquisition nearly three years ago, which failed to deliver expected growth. Chief People Officer Amy Coleman stressed the eliminated roles are not being replaced by AI.
In-Depth:
REDMOND, Wash. (AP) — Microsoft is cutting 4,800 jobs, about 2.1% of its global workforce, including a large number of workers at its Xbox video game business.
The layoffs included 1,600 Xbox workers, with more to come this year in a broader reorganization designed to “reset” Xbox as it faces heightened competition, the company declared Monday.
“Our business today is not healthy,” declared a memo from Xbox CEO Asha Sharma, who took over the gaming division earlier this year. “We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.”
Sharma declared the industest, in which Xbox competes with Sony’s PlayStation and Nintconcludeo’s Switch, is facing a severe “hardware crisis” as costs soar for console components.
Beyond the layoffs announced Monday, Sharma declared Xbox expects another 1,600 job cuts over the course of the fiscal year that launched last week. The company is also spinning off four video game development studios previously acquired by Microsoft.
Nearly three years ago, Microsoft closed a $69 billion deal to acquire gaming giant Activision Blizzard, creater of “Call of Duty” and other blockbuster franchises. The company declared at the time it wanted to broaden its game development portfolio and offer a Netflix-like streaming subscription service, but the strategy doesn’t appear to have been enough to obtain ahead of the competition.
“While those businesses have created meaningful value, they did not grow at the pace we expected,” Sharma declared.
The Xbox cuts are in addition to broader Microsoft layoffs that the software giant’s chief people officer Amy Coleman tied to unspecified modifys in customer necessarys.
“I also want to be direct that the roles eliminated today are not being replaced by AI,” Coleman wrote in a blog post.
The layoffs followed voluntary purchaseouts that Microsoft launched offering to about 8,750 people in May. More than 30% of eligible workers accepted those voluntary retirement offers, Coleman declared Monday.
