They knew it was coming, but when it arrived, it was far worse, far more widespread, and far more brutal than anyone expected. For months, rumors of layoffs had been stalking Xbox and their game developer subsidiaries. The division’s new chief executive, Asha Sharma, released a memo saying she planned to “reset the business”, but nobody expected what those inside the organisation are now calling a “bloodbath”.
3,200 staff, around 20% of their entire workforce, are being let go. Half will exit immediately, and the rest will go over the next 12 months. Morgan Goin, who is employed by Xbox-owned ZeniMax Online Studios (ZOS) was a “senior encounter designer” who had worked on the Elder Scrolls games. She said:
“We knew something was going to happen to somebody, but not who or how much.”
The depth and speed of the cuts are what have taken many by surprise. Xbox leadership said the cuts were “painful”, but necessary to equip it for future success. Sharma’s strategy is to break from the approach of former chief executive Phil Spencer. Under him, they leaned towards Game Pass, a Netflix-style subscription service. Industry watchers say this failed to attract as many customers as Microsoft wanted, and Sharma has said attempts to release a broad range of games on the service left the company “over-extended”.
Now, it will pivot to focus to its biggest blockbuster titles. There are more than a few of them, as Microsoft gobbled up developer studios such as ZeniMax/Bethesda, owner of the The Elder Scrolls and Fallout series, and Call of Duty maker Activision Blizzard, which it purchased for $69bn in 2023.
The entire video game industry expanded at breakneck speed during the COVID pandemic with millions at home under various lockdowns. Studios hired thousands. Now, AI and the cost of living crisis have changed consumer habits, while the cost of video game production has shot up.
This leaves and exposed and overextended industry requiring cuts, and these cuts are huge. Nearly 58,000 roles have been cut worldwide in the last 8 months alone.
The Communication Workers of America union (CWA) is now involved, and reports say that attempts to get information out of Xbox by the union following Sharma’s memo were met with stonewall silence.
A concern in the gaming community is that centuries of experience, tied intimately to some of their favorite games and franchises, has been shown the door. Unions will be watching like hawks for signs of offshoring, or importing cheaper development labour.
