Last week, there were rumors that Microsoft was preparing for major layoffs on the Xbox team. Bloomberg Now it is reported that employees of the company’s gaming department were told to lay off workers Wednesday morning. The PC giant has been carrying out cost-cutting tasks recently, announcing that it will give up 3% of its global workforce earlier this summer and announced on Wednesday that it would lay off 9,000 jobs.
according to BloombergMicrosoft is located in Stockholm’s Kings Department, Candy secret love10% of the employees are being laid off, with about 200 jobs. While some other European gaming offices are also being cut, U.S. departments are reportedly informed later Wednesday.
Phil Spencer, CEO of Microsoft Gaming, sent an email to all Microsoft gaming employees involving layoffs, which was made by Windows Central And confirmed to be true by Microsoft. Spencer said in it: “I recognize that these changes are happening when we have more players, games and game time than ever before. Our platform, hardware and game roadmap never look stronger. The success we are seeing is based on difficult decisions made before. We must continue to succeed in the years to come and in future success and key parts of the strategy to determine the discipline opportunity of priorities.
Here are all the notes Phil Spencer gave to employees:
Today, we are sharing decisions that will impact colleagues in our organization. To position the game for sustained success and to focus on strategic growth areas, we will end or reduce work in certain areas of the business and follow Microsoft’s leadership in removing management to improve agility and effectiveness. Out of respect for the people who are impacting today, your team leaders will share details of today’s notifications and any organizational transformation in the coming days.
I realize that these changes are when we have more players, games and game time than ever before. Our platform, hardware and gaming roadmap never looks more powerful. The success we are seeing is based on the difficult decisions we have made before. Now we have to choose the option to continue to succeed in the coming years, and a key part of this strategy is to prioritize the discipline that best opportunities. We will protect what is thriving and focus on areas with the greatest potential while meeting the company’s expectations of our business. This centralized approach means we can provide outstanding games and experiences to generations.
Prioritizing our opportunities is essential, but that doesn’t reduce the importance of this moment. In short, we wouldn’t be where we are today without the time, energy and creativity of the person whose characters are affected. These decisions do not reflect the talent, creativity, and dedication of the people involved. Our momentum is not accidental, it is the result of years of hard work from our team.
HR works directly with affected employees to provide severance program benefits (aligned with local laws), including compensation, health insurance and job placement resources to support their transition. Employees who eliminate roles are encouraged to explore public positions in Microsoft games, where their applications will be reviewed first.
Thank you to all the people who shaped our culture, our products and our communities. We will deeply appreciate and respect all those who have contributed to this journey.
As part of today’s layoffs, several games from Rare include Everwildhas been cancelled and proactively made to make the perfect dark reboot of Xbox Studio has been turned off. Matt Booty, head of Xbox Game Studios, broke the news to the team, saying Microsoft “has not made these choices easily because every project and team represents years of hard work, imagination and commitment.”
Here is the complete notes Matt Booty gave to the staff:
Following Phil’s notes, I would like to share more information about changes to the studio business unit.
We have decided to stop developing perfect dark and eternal development and have gotten rid of several unnotified projects in our portfolio. To do this, we are closing a studio, i.e. initiative. These decisions, along with other changes in our team, reflect broader efforts to align priorities and concentrate resources to build our teams in a changing industry landscape for greater success. We didn’t make these choices easily because each project and team represented years of hard work, imagination and commitment.
Our overall portfolio strategy has not changed: make games, inspire our players, continue to grow our largest franchise, and create new stories, worlds and characters. We have over 40 active development projects, with the title continued momentum this fall and a strong slate entering 2026.
For those who directly impact, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and possible opportunities to explore the roles of other teams.
To everyone in our studio: Thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our team and the direction we are on the road ahead.
Last year, Microsoft cut nearly 2,000 jobs from its gaming division, affecting employees at Xbox and Activision Blizzard. That same year, it also closed the trio of the Zenimax game development team after it acquired the video game holding company in 2021. This will be the fourth round of cuts on Xbox in the past 18 months. The layoffs come in the context of Microsoft’s $69 billion acquisition of Activision Blizzard in October 2023.
The gaming industry has been tough for several years, with an estimated 11% of game developers losing their jobs in 2024. Microsoft’s profits have been on a steady upward trajectory, with the company reporting more than $25 billion in net revenue in its last quarter report. When asked to comment, a Microsoft spokesperson told Engadget that the company “[continues] Implement the organizational and workforce changes necessary to bring companies and teams to success in dynamic markets. ”
Updated, July 2, 6:45 pm: The story has been updated several times since its release, including details confirming the layoffs, canceling several games, the closure of the initiative, and ambiguous comments from a Microsoft spokesperson.
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