Xbox Hit With Layoffs and Game Cancellations as Microsoft Cuts 9,000 Jobs

Major layoffs are rolling across Microsoft today, impacting game developers within Xbox across several studios and the projects they’re working on, even as an executive at the company told staff more gamers are playing Xbox than ever before.

According to The Seattle Times, 9,000 employees, or 4 percent of Microsoft’s workforce, are affected by the cuts, which started Wednesday morning. The full scope of layoffs within Microsoft’s gaming divisions are still unknown.

“We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” Microsoft spokesperson Jeff Jones told WIRED. The company says that although gaming is impacted, it does not make up the majority of layoffs, and these cuts will affect people in different regions, tenure, and teams.

In a message to staff seen by WIRED, Microsoft Gaming CEO Phil Spencer said Xbox is following “Microsoft’s lead in removing layers of management to increase agility and effectiveness … I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before.” Employees whose roles are being eliminated are being encouraged to apply for other positions across Microsoft gaming, “where their applications will be given priority review.”

Spencer added that the company will “protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business.” Gaming teams across Microsoft are still learning how their roles will be affected, with some sources saying they have staff meetings scheduled later today.

Windows Central reports that Perfect Dark developer The Initiative will close as part of the reductions sweeping the company, and its revival of the 2000 first-person shooter game has been canceled. VGC reports that Rare’s Everwild, an action-adventure game that’s been in development for over a decade, has been canceled, as employees continue to be informed of layoffs across other studios such as ZeniMax and King.

Everwild, which was expected to launch with Game Pass for Xbox Series X/S and PC, was a new, original title from Rare. Few details about the game were available, though development had been troubled; in 2021, the project was “restarted from scratch.” The game was officially announced in 2019 with a brief trailer. In February, during an interview with XboxEra, Spencer cited Everwild as a game release he was looking forward to. “It’s nice to see the team with Everwild and the progress that they’re making,” Spencer said at the time.

According to Bloomberg, The Elder Scrolls Online developer ZeniMax Online Studios is canceling a new MMORPG project due to the cuts. The outlet also reports layoffs of roughly 200 people at Candy Crush maker King and that layoffs are also taking place at Call of Duty developer Raven Software.

Spencer’s full message to employees is below:

Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today's notifications and any organizational shifts will be shared by your team leaders in the coming days.

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.

Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.

Phil