The layoffs involve about 2.1% of the global workforce in the Xbox gaming division, which hasn’t been able to measure up to Sony and Nintendo.
Microsoft has announced it is cutting approximately 4,800 jobs, equivalent to about 2.1% of its global workforce, and has warned employees that further changes remain likely as it continues
to reorganise operations and invest in artificial intelligence.
The Xbox Problem
The majority of the layoffs, about 3,200 jobs, were attributed to the restructuring of the Xbox gaming division. About 1600 of the laid-off workers were let go on the 6th of July. The problem the Xbox gaming division was facing shows that Microsoft is aware its expectations regarding gaming have not been met.
Microsoft has invested tens of billions of dollars into expanding the Xbox business, most prominently through its acquisition of Activision Blizzard. Despite that scale of investment, Xbox continues to lag behind Sony’s PlayStation and Nintendo in terms of market position and consumer loyalty, prompting the company to take a closer look at where it is spending and what it is getting in return.
The Broader Context
The layoffs show that the company is shifting its focus toward artificial intelligence and broader technology. It shows that Microsoft is redesigning the hiring process, with management signalling that employees should expect further changes in the months ahead.
What It Means for the Industry
Microsoft’s decision affects more than Microsoft’s accountancy. The reduction in Microsoft’s studios has significant implications for developers and their initiatives. Since the industry is experiencing issues related to the pandemic correction, the cuts to Microsoft’s studios will definitely make the situation more difficult for the industry as a whole.
