Microsoft cuts 4,800 jobs, Xbox faces major restructuring

Microsoft announced it is cutting 4,800 jobs, about 2.1% of its global workforce, in a restructuring that hits its Xbox gaming division hardest Source: BBC. The layoffs include 1,600 immediate Xbox cuts, with another 1,600 expected over the fiscal year, and the spin-off of four game studios Source: AP News.

Xbox in crisis

Xbox CEO Asha Sharma called the move "the most significant restructure in Xbox history" and said the division's business "is not healthy," operating at margins "3-10x lower than comparable platform and publishing businesses" Source: CNBC. She cited a "severe hardware crisis" as console component costs soar, leading to price increases of $100-$150 Source: CNN. Microsoft will spin off four studios: Compulsion Games and Double Fine Productions return to independence, while Ninja Theory and Undead Labs transition to new ownership Source: The Verge. Sharma noted that previous bets on Game Pass and studio acquisitions "did not grow at the pace we expected" Source: AP News.

AI and commercial cuts

Microsoft's chief people officer Amy Coleman said the roles eliminated are "not being replaced by AI," but acknowledged AI "is changing how work gets done" Source: Fox Business. The cuts extend beyond Xbox to the commercial sales organization, with 3,200 non-gaming jobs affected Source: Engadget. Coleman pointed to a "fast-changing industry" and said the company needs to "adjust resources and roles" Source: BBC. The layoffs follow a voluntary retirement program that saw more than 30% of eligible employees accept buyouts Source: The Verge.