Microsoft announced some major cuts to its Xbox division today, including offloading four game studios and laying off around 3,200 employees. As Xbox CEO, Asha Sharma stated in her tweet this morning, this is the “most significant restructure in Xbox history.”
The company is eliminating 1,600 jobs today, with the goal of eliminating 3,200 total through the fiscal year. That’s in addition to spinning off Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs. These are all game studios that Microsoft has acquired over the years. This is being done in an effort to return Xbox to profitability, something Xbox hasn’t done in years.
“Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games,” Sharma said. “Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3.”
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This is a bit shocking, to say the least. Considering Microsoft spent billions on these game studios, in an effort to develop more exclusive titles for Xbox. But it’s clear that Sharma wants to go in a different way with the Xbox division. She also noted that it is “neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested.”
So, Sharma is cutting the losses and looking to lean out Xbox. That’s a good idea, actually. Make the division leaner, so it can return to profitability; Elon Musk did something similar with Twitter when he took over. Sure there were some growing pains right after, but today, we’re seeing more development on Twitter (now called X), with a fraction of the employees that we ever saw when Jack Dorsey was running it.
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