Microsoft Axes 4,800 Jobs as It Restructures Xbox
Synopsis
The technology giant is overhauling its gaming business with thousands of job cuts, studio divestments and organisational changes aimed at boosting margins.
Key Highlights
- Microsoft to cut 4,800 positions (2.1% of total workforce)
- Xbox gaming accounts for the majority of layoffs.
- It is going to divest up to five gaming studios.
Microsoft to slash 4,800 jobs globally, 3,200 from Xbox gaming business over next 12 months
Asha Sharma, head of Xbox said that the gaming venture is now being run at a margin far below comparable businesses. This needed a huge reset among employees. Of those gaming cuts, 1,600 employees were terminated on Monday while the remaining cuts will happen throughout the next year.
Most of the rest of the job cuts will impact Microsoft’s sales and commercial workers, Chief People Officer Amy Coleman said the roles that have been eliminated are not being replaced by AI, though AI is transforming employee work throughout the company.
Gaming Studios to Change Ownership
The overhaul will include Microsoft selling off some gaming studios. Founders Compulsion Games and Double Fine Productions will return as private owners, while Ninja Theory and Undead Labs will be sold to unknown buyers who can continue work on their ongoing projects.
Meanwhile, Arkane Studios in Lyon France will begin discussions about its own future.
The restructuring comes as Microsoft continues to lag behind competitors Sony’s PlayStation and Nintendo in the gaming market, despite owning its own division that has invested billions into Xbox, including acquiring Activision Blizzard.
The Reaction On Tech Stocks
Microsoft was helping rally tech stocks, whose decline a day earlier following the U.S. inflation report was swiftly erased with investors buying into broadly AI- oriented companies at month end in front of the second quarter earnings season
The S&P 500 gained 0.72% and the Nasdaq Composite was up 1.12%. Broadcom gained after its custom chip relationship with Apple was extended through 2031, Nvidia soothed investors looking for a big beat amid reports of AI server roadmap delays, and Snapchat shares were boosted by rebounds in add-to-cart influencers.
The rally also comes ahead of Samsung’s quarterly update and the planned US$28 billion Nasdaq listing by SK Hynix, which investors are eagerly awaiting.
Source: Capital Brief
Follow Inspirepreneur Magazine for daily global business news.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
