Microsoft's gaming division has announced significant job cuts, impacting thousands of employees across various studios, including King, ZeniMax, and Turn 10. This widespread restructuring has also led to the cancellation of several anticipated games, such as Rare's Everwild and an unannounced ZeniMax Online Studios MMO, as the company prioritises strategic growth areas and cost control.
Xbox Undergoes Major Restructuring
Microsoft's gaming division is undergoing a substantial restructuring, resulting in widespread job losses and game cancellations. This move is part of a broader company-wide effort to control costs and streamline operations, affecting approximately 4% of Microsoft's global workforce, or around 9,100 employees.
Key Takeaways
Thousands of employees across Microsoft's gaming division have been impacted by the layoffs.
Notable studios affected include King (developer of Candy Crush), ZeniMax (parent company of Bethesda), and Turn 10 Studios (Forza Motorsport).
Several games have been cancelled, including Rare's Everwild, The Initiative's Perfect Dark, and an unannounced MMO from ZeniMax Online Studios codenamed Blackbird.
The cuts are part of Microsoft's strategy to focus on "strategic growth areas" and increase "agility and effectiveness" by removing layers of management.
This marks the fourth major round of layoffs for Microsoft's gaming business in the past 18 months.
Impact on Key Studios and Games
The layoffs have hit numerous studios within the Xbox ecosystem, leading to significant changes in their operations and project pipelines:
King: The Candy Crush developer saw approximately 10% of its staff, or around 200 jobs, eliminated.
ZeniMax Online Studios: An unannounced MMO, codenamed Blackbird, which had reportedly impressed Xbox executives, was cancelled. The president of ZeniMax Online Studios, Matt Firor, is also departing.
Rare: The long-in-development Everwild has been cancelled.
The Initiative: The studio behind Perfect Dark has been closed, and the game cancelled.
Turn 10 Studios: The developer of Forza Motorsport will lose over 70 employees, with sources indicating that enough staff remain to keep the game operational.
Blizzard: Development on the mobile title Warcraft Rumble is being wound down, with no new content planned.
Xbox User Research Team: This crucial team, responsible for ensuring quality across Xbox games and the platform, has been severely impacted, with nearly half its members laid off.
Leadership's Perspective
Phil Spencer, CEO of Microsoft Gaming, addressed staff in a memo, stating, "To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft's lead in removing layers of management to increase agility and effectiveness." He emphasised that these decisions, while difficult, are necessary for future success and to prioritise the strongest opportunities.
Despite rumours circulating about his retirement, Microsoft has confirmed that Spencer is not planning to step down as the chief of Xbox "anytime soon."
A Pattern of Reductions
These latest layoffs continue a trend of significant workforce reductions within Microsoft's gaming division. Since acquiring Activision Blizzard for $69 billion, the company has undertaken several rounds of cuts:
January 2024: 1,900 staff laid off across Activision Blizzard, Bethesda, and Xbox.
September 2024: A further 650 staff cut from the gaming business.
May 2025: 6,000 staff, or 3% of Microsoft's entire workforce, were cut across various divisions.
This ongoing restructuring highlights Microsoft's commitment to a more focused and agile gaming strategy, even as it continues to promote a multiplatform approach for its first-party titles and prepares for the release of next-gen Xbox consoles.
