Written by Alec Blackwood

Microsoft has announced major workforce cuts impacting nearly 9,000 employees, with its gaming divisions absorbing significant losses. Notably affected include Xbox Game Studios and King’s Stockholm office. Unlike past layoffs tied to financial struggles, these reductions come during a period of record profitability for the company.

Key casualties of the restructuring:

• The Initiative studio (developing the Perfect Dark reboot) shuttered
• Rare’s long-developing Everwild project canceled
• 200+ layoffs at King’s Sweden office, signaling a retreat from mobile gaming

Xbox head Phil Spencer described the cuts as necessary to “prioritize the strongest opportunities,” citing record player engagement in an internal memo. However, critics highlight the disconnect between these layoffs and Microsoft’s recent $25 billion quarterly net income.

This marks Microsoft’s fourth major restructuring in 2024, following:

• Closures of multiple Bethesda-associated studios
• Hundreds eliminated from Activision Blizzard

Developers globally express concerns about:

• Lack of transparency in termination processes
• Sudden notifications, with some U.S. staff reportedly learning of cuts hours before implementation

The company faces scrutiny for contradictory strategies:

• Publicly promoting game development growth
• Privately canceling projects and dismantling teams mid-development

Microsoft’s current approach prioritizes:

• Established franchises over experimental IPs
• Centralized decision-making rather than studio autonomy
• Financial consolidation amid lengthening development cycles

Despite owning more studios than ever, the company’s output of original titles has declined, reflecting a strategic shift toward protecting high-revenue properties over nurturing creative risks.