Microsoft reportedly preparing fresh Xbox layoffs amid strategic reset: What we know
Follow UsMicrosoft is reportedly planning a fresh round of job cuts at its Xbox gaming division.
The layoffs are expected to take place shortly after Microsoft's fiscal year ends on June 30.
The reported layoffs would be the first major restructuring under Xbox CEO Asha Sharma.
Microsoft is reportedly planning a fresh round of job cuts at its Xbox gaming division. According to a Bloomberg report, the layoffs are expected to take place shortly after Microsoft’s fiscal year ends on June 30. The exact number of employees who could be affected has not been revealed. The report also claims that Xbox is planning reductions in marketing spending and other parts of the business.
SurveyThe reported layoffs would be the first major restructuring under Xbox CEO Asha Sharma, who took charge in February. Sharma has previously acknowledged that Xbox is facing challenges and recently said she planned on “resetting the business” because it was “not in a healthy spot.”
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In an email to employees seen by Bloomberg, Sharma highlighted the financial struggles. She wrote, “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined nearly half a billion during that time.” “Going forward, this cannot continue.”
Sharma also stated that Xbox would need to rethink its future plans and investment priorities. “We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming and devices,” she wrote. “In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.”
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Xbox has faced several challenges in recent years. Sales of Xbox consoles have reportedly fallen, Game Pass growth has slowed and the company has struggled to consistently deliver hit games. To improve profits, Microsoft has already closed studios, canceled projects and increased prices over the past two years.
The report also suggests that Sharma is changing Xbox’s approach to game exclusivity. During the recent Xbox Showcase event, the company confirmed that upcoming titles such as Gears of War: E-Day and Clockwork Revolution will not launch on PlayStation or Nintendo Switch. For those who do know, in recent years, Xbox has released most of its software on rival consoles.
Despite the challenges, Sharma’s goal is long-term growth rather than meeting profit targets. “My mandate is not a 30% accountability margin,” she said, as per the report. “It’s not enterprise software margins. It’s to be the number one gaming and entertainment company.”
