Microsoft’s Xbox division is cutting more than 3,000 jobs, roughly 20% of the organization, according to internal communications reported by Kotaku. For the people making Xbox games, the practical version is uglier than the spreadsheet version: 1,600 workers were set to lose jobs immediately, with more cuts to follow.
The layoffs land heavily across studios Microsoft bought during its acquisition spree, including businesses tied to Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios, according to Kotaku’s account of an email from Xbox CEO Asha Sharma. Techdirt reported that Microsoft had previously told the Federal Trade Commission and courts during acquisition fights that layoffs would not follow those deals.
Sharma’s email said no publicly announced first-party Xbox games or projects were being canceled as part of the restructuring, according to Kotaku. That is a narrow promise. Keeping a project alive on paper does not say much about who is left to ship it, how long it takes, or how much contractor glue gets poured into the gaps.
Studios are being moved, sold or left in limbo
The restructuring is not limited to headcount. Kotaku reported that Compulsion Games and Double Fine will become independent studios. Ninja Theory and Undead Labs have agreed to move to new ownership with financing intended to finish and expand work on Senua and State of Decay 3, though the details of those deals have not been disclosed.
Arkane Lyon is in a legally required consultation process in France, according to Kotaku, leaving the studio’s future unresolved. Mojang and King will now report directly to Sharma, the email said.
The cuts are paired with management’s stated plan to concentrate spending and staff on Xbox’s “core franchises,” according to Techdirt. That sounds tidy until it meets production reality. IGN reported that current and former Bethesda staff, speaking anonymously to protect their jobs, said Bethesda Game Studios lost more than 50 employees, including experienced staff working on the next Elder Scrolls game.
Those workers told IGN the losses had damaged morale, increased the risk of crunch and made further delay of the long-awaited Skyrim successor more likely. Microsoft’s stated position, as reported by Kotaku, is that announced projects are not being canceled. IGN’s reporting says the teams building at least one of those projects are being hollowed out anyway.
Morale problems spilled into the office
The internal handling has also drawn criticism from workers. Kotaku reported that employees at several Bethesda offices created “Celebrations of Service” displays in shared spaces, with photos and messages recognizing colleagues who had been laid off.
A union account said HR ordered at least one display removed almost immediately because it was in a common area, according to Kotaku. The account said employees had previously used shared spaces for team materials, including fan works, but that HR treated the layoff memorial as inappropriate.
Sharma was also named to a Federal Reserve task force on jobs and productivity days after announcing the cuts, according to Kotaku. In a July 9 press release, Fed Chairman Kevin Warsh said the central bank was reviewing whether its tools and policy approaches could improve as it pursues price stability and maximum employment.
For Xbox workers, the timing is hard to miss. The executive overseeing one of the division’s largest restructurings is now advising a body studying employment and productivity. That does not change the layoff notices, the studio transfers or the uncertainty at teams Microsoft recently bought. It does explain why employees are reading every management email like it might be a weather report from the volcano.
This story draws on original reporting from Techdirt.
