Microsoft’s Xbox Reportedly Plans Major Layoffs and Budget Cuts
Microsoft's Xbox division is reportedly preparing for major layoffs next month alongside significant budget reductions, according to Bloomberg News. The reported restructuring would be the first major overhaul under Xbox CEO Asha Sharma, who took charge in February. Bloomberg said the gaming business has faced challenges from declining console sales, weaker revenue growth and pressure on profitability despite heavy investment in content and platforms. The exact scale of the layoffs remains unclear. Microsoft has not officially confirmed the reported cuts, which are expected to take place after the end of its fiscal year in June.
According to a news report, Microsoft's Xbox division is reportedly preparing for mass layoffs next month and deep cuts alongside marketing and other budgets. Those reported cuts would be the largest restructuring so far under Xbox lead Asha Sharma, who took over leadership of the gaming division in February.
Details on job cuts, such as the scale of cuts or what divisions they might be in, have not been disclosed but layoffs are coming shortly after Microsoft closes its fiscal year June 30.
Xbox Faces Ongoing Business Challenges
Microsoft has invested heavily into subscription services and cloud gaming to combat falling Xbox console sales and a lack of other big box office games, but it has come under growing pressure.
Sharma said in an internal e-mail to employees that Xbox's managed margin is now down to 3% even after more than $20 billion on content, platforms and hardware subsidies across the last five years.
It also reported a 61% drop in annual revenue for the same period of almost half a billion dollars.
Under a new leadership, strategy changes persist
The report cited Sharma as stating Xbox will have to rebuild aspects of its platform infrastructure and reconsider certain areas in its portfolio over the next couple months.
Reported restructuring comes on the heels of several strategic changes the company announced earlier this year. The comparable value for the Call of Duty, last month, was cut by Microsoft for its Game Pass subscription service and ended day and date launches of future Call of Duty games on Microsoft platforms. Microsoft did not provide an official answer to query over the purported layoffs or funding cuts.
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