Microsoft announce a massive wave of layoffs, including their Xbox and gaming division. This has led to multiple games being cancelled, legacy developers walking away, and rumors once again of how long Phil Spencer will remain at the company.
On June 24th, Bloomberg’s Jason Schreier reported that Microsoft was planning another round of major layoffs for their Xbox and gaming division, noting that this information was shared by “people familiar with the plans.” This would be the second this year, and fourth in the last eighteen months. Unsurprisingly, Microsoft declined to comment.
Just over a week later, Schreier reports “hundreds” of employees were laid off via anonymous sources, while an Xbox spokesperson “declined to confirm how many people were impacted.” All of Microsoft’s gaming subsidiaries were in the firing line. For example, King lost two-hundred jobs, 10% of their staff.
Another affected office includes ZeniMax, which logically would include their subsidiaries Bethesda and id Software.
Other studios confirmed to be affected are those focused on some of Microsoft’s biggest hitters: Call of Duty, Halo, and Forza Motorsport. That would be Raven Software, Sledgehammer Games, Halo Studios, and Turn 10 Studios.
These layoffs have also seen “several projects” being cancelled, even those that had been in development for years, and in some cases publicly revealed. Rare’s Everwild is cancelled, along with a new online game by ZeniMax Online Studios.
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Another case is the Perfect Dark reboot, which was already had troubled development and little progress. Not only is it cancelled, but one of its development studios, The Initiative, has shut down.
Matt Booty, Microsoft Gaming’s President of Game Content and Studios, told staff in an email that the studio and project closure “reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape.”
As noted in Schreier’s updated report — and corroborated by Bloomberg‘s Brody Ford and Matt Day — Microsoft finally announced the layoffs officially the same day. A Microsoft spokesperson confirmed, though less than 4% of their workforce, around nine-thousand jobs would be affected (in Ford and Day’s words) “across teams, geographies and tenure.”
Microsoft previously cut six-thousand jobs in May this year, hitting product and engineering-focused positions. Employees in the gaming division had been expecting layoffs ever since. Some outlets and social media posts have claimed Microsoft is attempting to re-open these positions later, and offer them to H-1B workers for cheaper pay.
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The reasoning behind the cuts were to streamline development and reduce management layers. “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” the spokesperson assured.
Ford and Day also report Microsoft “seeks to control costs while ramping up on artificial intelligence spending,” and have already spent “tens of billions of dollars on data centers and application development.”
Microsoft Gaming CEO Phil Spencer reportedly told employees in an email, “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.”
The Microsoft head also noted employees that were laid off would be “given priority review” if they apply for other jobs in Microsoft.
Despite this news, Spencer insisted Microsoft’s “platform, hardware, and game roadmap have never looked stronger,” though nonetheless, “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.”
Schreier ends his report noting the gaming division had been “under pressure” to boost profits ever since Microsoft finalized acquiring Activision Blizzard back in October 2023. They have also suffered from the multiple waves of layoffs.
In potentially related news, the director for The Outer Worlds 2 said in regards to the game’s $80 price tag that consumers would “have to honestly talk to the Xbox folks.”
After the layoffs became public knowledge, the extent of the fallout was revealed in bits and pieces. Brenda Romero of Romero Games announced, “Last night, we learned that our publisher has canceled funding for our game along with several other unannounced projects at other studios” — leaving them scrambling to evaluate “next steps” and ways to support the team.
Christoph Redl, former Hard Surface Artist, revealed, “Unfortunately, due to the recent Xbox layoffs, I’ve lost my position at Romero Games. I’m now actively looking for new opportunities as a Prop Artist, Hard Surface Artist, or 3D Artist. I’m open to both in-house and remote roles and excited to bring my skills to a new team.”
On LinkedIn, many other Romero Games employees are revealing they are being laid off, with UI artist Ana Mitrovic claiming, “the mass Microsoft layoff effectively cancelled funding for Romero Games and as a result the whole team was laid off.”
Warcraft Rumble, a free-to-play mobile game that combined tower-defense with action strategy, was another victim. A news post on the official Blizzard website revealed the game would not be receiving any new content. They noted the game had “struggled to find its footing relative to our ambition for its long-term success.”
Alex Apple, client engineer at Blizzard, revealed on LinkedIn, “The other shoe finally dropped and Microsoft has now laid off me along with the entire Warcraft Rumble team. Time to start the grind all over again.” This is consistent with other posts on the platform.
There were also more prominent names choosing to leave on their terms. ZeniMax Online Studios’ President, Matt Firor, revealed he was quitting amid the chaos and the aforementioned cancelled game.
“After more than 18 years leading ZeniMax Online Studios, I’ll be stepping away later this month. The studio and The Elder Scrolls Online will be in great hands under the direction of new Studio Head, Jo Burba along with Executive Producer, Susan Kath and Game Director, Rich Lambert.”
“Together, this leadership team has spearheaded many of ESO’s biggest ideas and expansions and will continue to make this game something we’re all proud of. While I won’t be working on the game anymore, I will be cheering you on and adding to the thousands of hours I’ve already spent in-game. There are many more stories to be told, adventures to be had, and I know this amazing community will carry that shared legacy and success forwards,” Firor assured.
Despite the well-wishing, IGN‘s Rebekah Valentine reports the entire team that was working on the unannounced ZeniMax MMO was laid off. Codenamed ‘Blackbird’, it had begun development in 2018, and would have been a sci-fi game, in an entirely new engine.
Pre-production had gone well, and Xbox had approved scaling up the project, and had even moved staff from other teams onto the project. One source even claimed Booty told them last year the closures of Arkane Austin and Tango Gameworks were done to justify the increasing headcounts at other game studio — including ZeniMax Online Studios.
The only reason the team knew they were being laid off before the fateful day was due to news reports off the layoffs, and Slack access was revoked before HR broke the news to them.
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VGC‘s Andy Robinson reports, with multiple Rare employees speaking to the outlet anonymously, Gregg Mayles will be leaving the company. Having been with the developer for 35 years, he directed Banjo Kazooie, and Sea of Thieves.
Yet he, along with executive producer Louise O’Connor, are reportedly leaving the studio over the cancellation of Everwild.
But what of Spencer? The man steering the division’s ship, and many already doubting him after a string of bombs. @TheGhostofHope- who Insider Gaming‘s editor-in-chief Tom Henderson touts as having “decent track record regarding Call of Duty leaks”- offers some potential insight.
“Phil Spencer will be retiring from his role as CEO of Microsoft Gaming after the launch of the next generation Xbox,” @TheGhostofHope claims. “Phil Spencer is working closely with Sarah Bond and her team to ensure a smooth transition for her take over as CEO of Microsoft Gaming once he retires.”
“Unclear as of yet who would take over as President of Xbox when Sarah Bond becomes the CEO of Microsoft Gaming,” Hope admits. Henderson also corroborated the claims, adding that he had heard the rumor circulate “for some time” and “a couple of times this year at the Summer Game Fest.”
Frank Shaw, Microsoft’s Chief Communication Officer, communicated his opinion quite clearly, dismissing Henderson’s and the X user’s claims as “made it up.” Kari Perez, Microsoft’s VP of Gaming Communications, made a slightly different statement to The Verge: “Phil is not retiring anytime soon.”
Earlier in June, Xbox had announced they were working on their next-generation console, and entering a multi-year partnership with AMD. The announcement video was presented by Sarah Bond. As such, it’s not impossible for Spencer to not retire “anytime soon,” and doing so once the next generation is out.
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