Key Takeaways:
- Despite layoffs, Microsoft is thriving financially, reporting strong profits and a soaring stock price.
- Microsoft is cutting around 9,000 jobs globally, including significant layoffs at Xbox and mobile studio King.
- CEO Phil Spencer says the cuts are necessary to prioritize future opportunities and maintain long-term success.
Nearly 9,000 Jobs Eliminated Across Microsoft
Despite posting strong quarterly earnings and a booming stock price, Microsoft is cutting thousands of jobs, including key roles in its Xbox division. The company confirmed to Variety that it is laying off under 4% of its global workforce—roughly 9,000 people out of its 228,000 employees.
The layoffs extend beyond Xbox, with Microsoft’s mobile gaming arm King, based in Barcelona and known for Candy Crush, cutting 10% of its staff—about 200 jobs. ZeniMax’s European offices are also affected, marking another blow to the broader Microsoft Gaming portfolio.
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Xbox CEO Phil Spencer Defends Strategic Cuts
In a company-wide memo, Microsoft Gaming CEO Phil Spencer addressed the layoffs, characterizing them as painful but necessary for Xbox’s “enduring success.” He emphasized the need to streamline operations and eliminate management layers to improve agility.
“We will end or decrease work in certain areas… and follow Microsoft’s lead in removing layers of management,” Spencer wrote. Despite acknowledging record engagement on Xbox, he justified the layoffs as future-facing strategy: “We must make choices now for continued success in future years.”
Spencer further stated that the company’s recent success is the result of tough decisions made in prior years, and more will be needed to sustain growth and deliver “exceptional games and experiences” long-term.
Layoffs Follow Years of Restructuring in Gaming Division
This isn’t the first wave of layoffs at Xbox. Since Microsoft’s $69 billion acquisition of Activision Blizzard, over 1,900 roles have been eliminated, with another 650+ layoffs and the May 2024 closure of four ZeniMax-owned studios, including Arkane Austin and Tango Gameworks.
Microsoft’s broader cost-cutting initiative has affected multiple divisions and led to thousands of layoffs over the past two years, even as the company posted $70.1 billion in revenue (up 13%) and $25.8 billion in profit (up 18%) in its most recent quarter. Microsoft’s stock has surged nearly 150% over the past five years.
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