REDMOND (dpa-AFX) - Microsoft (MSFT) Xbox division is gearing up for its biggest restructuring yet, planning to cut around 3,200 jobs during fiscal 2027, with about 1,600 of those coming right away.
This shake-up will also involve the potential spin-off or sale of several game studios, a move to streamline management, and a shift in focus towards the company's top gaming franchises.
In a memo sent internally, Xbox leaders pointed out that their business has been running with profit margins that are three to ten times lower than those of similar platforms and publishing companies. They mentioned that growth for Game Pass and multi-platform projects has been slower than hoped, alongside a struggling core business, all while facing what they described as the worst hardware slump in gaming history.
As part of these changes, studios like Compulsion Games and Double Fine Productions will operate independently, while Ninja Theory and Undead Labs will change hands. Arkane Studios is also looking into its options in France. Xbox has assured that none of the first-party games they've announced are being cancelled.
The restructuring aims to streamline operations by cutting down management layers to a maximum of five, simplifying development processes, and slashing vendor costs by half. Mojang and King will report directly to Xbox leadership now, given their importance as the company's biggest platforms in terms of active users each month.
This restructuring is hitting Bethesda and ZeniMax Media hard. A WARN notice filed in Texas revealed that 158 employees have been laid off, including 136 at id Software in Richardson and 22 at Bethesda Game Studios in Austin. Among those affected, 146 are part of the Communications Workers of America union.
Reports suggest that id Software, known for Doom: The Dark Ages, has lost about half its staff, particularly impacting its quality assurance team.
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