Microsoft has announced a new round of layoffs impacting approximately 500 employees, primarily within its Xbox gaming division. This latest round of job cuts, which follows a similar reduction in July, signals a significant restructuring phase for Xbox as it aims to streamline operations and consolidate its studios.
Xbox’s Strategic Overhaul
The company’s gaming division is set to reduce its workforce by about 20% by the end of the current fiscal year. This move is part of a broader strategy to re-evaluate its business portfolio and integrate its various game development studios more effectively. Matt Booty, Executive Vice President of Microsoft Gaming, detailed these changes in an internal memo, highlighting that the restructuring efforts initiated in July are now about three-quarters complete, including the divestiture of certain studios.
Key Organizational Changes
The restructuring involves several key shifts in studio management and development focus:
Studio Consolidations and New Development Assignments
- Activision’s Expanded Role: Activision will now oversee World’s Edge and Rare. Notably, the next installment of the Halo franchise will be developed by Activision, handled by a newly formed team separate from the Call of Duty development. A small team will remain at 343 Industries to support the Halo community and existing games.
- Bethesda’s Integration: Obsidian Entertainment will be brought under Bethesda’s management. Obsidian will continue its current projects, including Grounded, and will collaborate with Bethesda on a new Fallout project.
- King’s New Division: King will take over Microsoft Casual Games, merging two leading teams in casual game design and long-term operations.
- Playground Games and Turn 10 Merger: These two studios will merge to form a single entity focused on the Forza and Fable series. This consolidation formalizes the existing decade-long collaboration between the studios in technology, creativity, and game development.
Studio Divestiture Updates
Microsoft has also provided updates on its studio divestiture plans:
- In August, Compulsion Games and Double Fine, along with their intellectual properties and back catalogs, were transferred to their original management teams.
- Undead Labs has also completed its transfer under similar conditions and will release State of Decay 3 with the support of a new publisher, available on Game Pass on day one.
- Negotiations for separate acquisition agreements for Ninja Theory and Arkane have not been successful. Microsoft is consulting with employees regarding the potential closure of Ninja Theory while continuing to explore other options. Discussions with Arkane are ongoing and expected to conclude by year-end.
Moving Forward
Booty emphasized the importance of supporting affected colleagues with care and respect. He plans to connect with each studio in the coming week. The Xbox team will convene for an all-hands meeting on October 6th to reflect on progress and look ahead to what is described as one of the most powerful game lineups in Xbox history.
This restructuring reflects Microsoft’s ongoing efforts to optimize its gaming business following significant acquisitions and expansion over the past few years. The focus appears to be on creating more cohesive development structures and aligning studio capabilities with strategic franchise priorities.
