Microsoft is reportedly preparing to reduce staff within its Xbox division as early as next week, according to several reports.
While the company had previously announced a broader wave of layoffs, insiders now revealed to Bloomberg that a significant portion will come from the gaming branch of the business.
It’s hardly the first time Xbox has faced cuts in recent years. Back in January 2024, Microsoft trimmed nearly 1,900 jobs from Activision Blizzard and Xbox teams.
Just a few months later in May, several game studios, including Alpha Dog Games, Roundhouse Studios, and Arkane Austin, were shuttered. Tango Gameworks, the developer behind the acclaimed Hi-Fi Rush, was the sole survivor of this move thanks to a rescue from South Korean publisher Krafton.
What makes the timing feel especially rough is that June has otherwise been a busy and promising month for Xbox. The spotlight recently shone on the Xbox ROG Ally, a handheld gaming PC developed alongside Asus that marks Microsoft’s first major push into the portable gaming market.
Then, on June 17, Xbox president Sarah Bond announced a partnership with AMD to “co-engineer” the next Xbox console hardware, promising some serious power upgrades down the line.
“Together with AMD we’re advancing the state of art in gaming silicon to deliver the next generation of graphics innovation to unlock a deeper level of visual quality and immersive gameplay and player experiences enhanced with the power of AI, all while maintaining compatibility with your existing library of games” she said. “Our vision is for you to play the games you want, with the people you want, anywhere you want.”
Microsoft is clearly recalibrating its gaming strategy. While an exit from the video game industry seems unlikely in the near future, it’s evident that the company is tightening its expectations for Xbox.