Xbox to cut 3,200 jobs and divest five studios

• Xbox makes sweeping cuts across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios.
• Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs and Arkane set to be dropped – but are expected to stay in business.
• Mojang and King highlighted for platform potential and high monthly active users amid company reset.

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Xbox is set to lay off 3,200 staff and divest five studios as it makes sweeping cuts to its games business.

Approximately 1,600 staff will be made redundant across the company today, while further job cuts will take place over the coming year.

In addition to the layoffs, Compulsion Games and Double Fine Productions will be divested under management buyouts, once again becoming independent studios and taking their IP with them.

Ninja Theory and Undead Labs will be sold to as-yet unnamed acquirers. Arkane management in France has begun consultation with the Works Council to review potential strategic options.

Sweeping job losses

Cuts have been made across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Though no specifics to how impacted each unit is was disclosed.

Xbox said none of its first-party publicly announced games or projects will be cancelled. It should be noted, however, that it is divesting first-party studios that have already revealed new games.

Mojang and King will now directly report to Xbox CEO Asha Sharma. The Xbox boss called out the companies’ platform potential and that they have become the business’s largest by monthly active users.

Sharma also said some Xbox layoffs would be targeted at layers of management in its platform business.

Elsewhere, Xbox is shaking up its leadership team once again. The company has promoted Helen Chiang to the role of chief operating officer. She was previously the corporate VP for the Minecraft franchise.

“I know this is painful”

“I recognise that a year-long restructuring creates additional challenges,” said Sharma. “Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.

“I know this is painful. These changes will directly affect people who have poured their creativity into building Xbox. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved Xbox. Today’s decisions do not reflect their talent or dedication.

“Our business today is not healthy. We are operating at margins that are three-to-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. 

“To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox.”