The troubles at Xbox may be far from over despite the recent wave of layoffs, as Microsoft has set an “utterly unrealistic” financial target for the company’s gaming division that will most likely hurt them in the future.
There’s still very little information regarding the Xbox firings from last week, though estimates suggest that around 4,000 jobs were cut. In an internal memo, Xbox head Phil Spencer described these cutbacks as a necessary step to “remove layers of management to increase agility and effectiveness.” But for developers caught in the middle, it means more uncertainty moving forward.
To make matters even worse, Windows Central journalist and industry insider Jez Corden revealed over the weekend that Microsoft’s CFO Amy Hood has set an absolutely “unrealistic” profit target for the gaming department, and that failing to meet it will likely lead to another round of layoffs.
The Verge’s Tom Warren also weighed in, saying the Activision Blizzard acquisition has forced Microsoft to set tighter targets.
Warren noted that without the deal, and given that the Game Pass gamble hasn’t paid off yet, revenue would be down.
A Troubled Road for Xbox
It’s hardly the first time Xbox has faced layoffs in recent years. Back in January 2024, Microsoft trimmed nearly 1,900 jobs from Activision Blizzard and other teams. Just a few months later, 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.
Among the affected projects this time round was Everwild, a long-awaited title from British developer Rare, along with an unannounced sci-fi MMORPG that was in the works at ZeniMax Online. King, the studio behind Candy Crush, was also hit and is reportedly letting go of around 200 employees.