Microsoft’s Xbox division is undergoing the most significant restructuring in its history, with plans to cut 3,200 jobs.
This marks 20% of the company’s workforce as new CEO Asha Sharma moves to revive the struggling games business.
Writing in a note on Monday, July 6, Sharma stated that “our business today is not healthy,” citing operating margins that are three to ten times lower than comparable platforms and publishing companies.
She wrote: “We need to reset the Xbox.”
The restructuring consists of 1,600 positions being cut immediately, followed by the rest within a year. In addition, four studios will leave Xbox: Compulsion Games and Double Fine Productions will become independent studios, retaining their intellectual property rights and finances for future projects, while Ninja Theory and Undead Labs are negotiating new owners for the completion of Senua and State of Decay 3. There are also consultations with Arkane Studios about possible strategic moves in France.
The layoffs extend beyond game development and affect teams across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios. But Sharma confirmed that no publicly announced first-party games or projects will be cancelled.
According to Sharma, Xbox’s problems arise because the company entered the latest generation of consoles with a lower installed user base and higher costs, along with lower growth from Game Pass and multi-platforms.
To address these issues, Sharma has announced a new organizational structure with no more than five management layers, reduced supplier costs by 50% and simplified operations. Helen Chiang has been promoted to COO with full P&L responsibility for content, hardware, platform and services.
Longtime director Dave McCarthy is also stepping down from his position at Xbox after 17 years.
