Chris Kerr, Senior Editor, News, GameDeveloper.com
July 2, 2025
3 Min Read
Microsoft has commenced its latest round of layoffs at Xbox with an undisclosed number of job cuts.
In a statement sent to Game Developer, an Xbox spokesperson confirmed that “workforce changes” are being made but neglected to provide specific numbers.
“We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” reads the brief statement.
They added that Microsoft has a history of making workforce adjustments to meet the strategic demands of the business “even in the best of times,” and noted the company is keen to increase its agility by “reducing layers with fewer managers.”
“We will empower employees to spend more time focusing on meaningful work by leveraging new technologies and capabilities,” they continued. “To enhance our efficiency, we will eliminate redundancy by streamlining our processes, products, procedures and roles.”
Bloomberg reports the company initiated the process this morning by making around 200 people redundant at King’s offices in Barcelona, Spain. People familiar with the plans said those cuts represent about 10 percent of the mobile studio’s workforce.
The publication stated that other European offices such as ZeniMax were also impacted. Employees in the United States are expected to be informed of further cuts later today.
Related:Xbox closes The Initiative and cancels its Perfect Dark reboot
Meanwhile, The Seattle Times reports that Microsoft is laying off 4 percent of its total workforce, representing around 9,100 employees. For context, Microsoft employs over 228,000 people worldwide.
Multiple game cancellations are also being reported. Sources have told Bloomberg reporter Jason Schreier an MMORPG project that has been in development at Zenimax Online Studios since 2018 has been canned. In addition, VGC claims long-gestating Rare project Everwild has been scrapped following layoffs at the UK studio.
Xbox boss claims latest layoffs will help deliver ‘enduring success’
IGN has also obtained a message from Xbox boss Phil Spencer sent to the company’s game division earlier today that states the layoffs are being made to “position Gaming for enduring success.”
“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,” it reads. “Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.”
Related:Report: Return to Moria developer Free Range Games lays off 80 people
Spencer added that Microsoft will strive to protect the areas of its video game business that are “thriving” to unlock the segment’s potential. He also suggested the cuts are being made while the company is in a position of strength. “I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before,” he continued.
“Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities.”
The redundancies represent the fourth major round of layoffs at Microsoft since the Xbox maker completed its mammoth $68.7 billion merger with Activision Blizzard.
The company started 2024 by laying off 1,900 people across its video game business. It followed those cuts by shuttering key studios such as Arkane Austin, Alpha Dog Games, and Tango Gameworks a few months later—although Tango was eventually pulled back from the brink after being purchased by Krafton.
Microsoft then laid off another 650 video game workers in September 2024.
Related:Subnautica developer Unknown Worlds loses leadership team
Update 7/2: Microsoft has reportedly closed Santa Monica-based studio The Initiative following the cancellation of the Perfect Dark reboot first announced in 2020.
About the Author
Senior Editor, News, GameDeveloper.com
Game Developer news editor Chris Kerr is an award-winning journalist and reporter with over a decade of experience in the game industry. His byline has appeared in notable print and digital publications including Edge, Stuff, Wireframe, International Business Times, and PocketGamer.biz. Throughout his career, Chris has covered major industry events including GDC, PAX Australia, Gamescom, Paris Games Week, and Develop Brighton. He has featured on the judging panel at The Develop Star Awards on multiple occasions and appeared on BBC Radio 5 Live to discuss breaking news.
