Microsoft is reducing its gaming division by approximately 4.800 jobs in the biggest restructuring in the brand's history and simultaneously divesting itself of four well-known development studios. The company is thus radically correcting its aggressive acquisition strategy of recent years in an effort to improve the division's weak margins.
Xbox CEO Asha Sharma announced the latest wave of layoffsThis restructuring will extend throughout the entire fiscal year 2027. Specifically, 1.600 jobs will be eliminated at Xbox with immediate effect. All divisions are affected, including Activision Blizzard, Bethesda, and King. Simultaneously, Microsoft is completely divesting four first-party studios.
The developers at Compulsion Games and Double Fine Productions are becoming independent under the leadership of their respective management teams and will retain their brand rights. New, as yet unnamed, publishers have been found for Undead Labs and Ninja Theory to take over their ongoing operations.
According to the company, ongoing projects like "State of Decay 3" and Ninja Theory's next project will be funded and completed, but will be released outside the Xbox ecosystem in the future. A legally mandated consultation process has been initiated for the French studio Arkane Lyon, leaving the future of the licensed Blade game completely uncertain.
The failure of the subscription model in a tough market environment
The official reasons This time, the top brass refrained from the usual PR spin. Sharma made it unequivocally clear that the business was not healthy. According to him, Xbox's operating margin is three to ten times lower than that of comparable platform operators and publishers. The attempt to offset the structural deficit through the growth of Game Pass, multi-platform releases, and massive studio acquisitions simply failed. Growth fell short of expectations. Period.
Added to this is the ongoing slump in the console market, which is hitting Microsoft harder than its competitors due to its already lower hardware base. The consequence is a ruthless retreat to its profitable core franchises. Studios like Double Fine and Ninja Theory were primarily acquired as prestigious additions to the company's subscription service, but could never justify their enormous development costs on a purely economic level. Microsoft is now pulling the plug.
For gamers, this shatters the illusion that unlimited tech billions guarantee long-term stability. Those who hoped for exclusive blockbusters on Game Pass are now facing the wreckage of a failed growth strategy.
While "State of Decay 3" and "Senua" are still coming, they will be released as full-price titles on all platforms. This drain on Xbox's console hardware further erodes its already thin foundation of unique selling points. In the end, money rules, not the brand.
And when everyone has killed each other, Sega comes back 😂😂
Shong Xina Naja, even after the layoffs, Xbox is still by far the world's largest employer in the video game industry, they still have plenty of room for growth 😉
Daniel Scheitler still found the idea quite funny 😅
Shong Xina: So far, Microsoft has hurt itself the most.
Good reviews alone are unfortunately not enough; sales on PS5, Xbox Series and PC are also needed.
Many also expected Hellblade 2 to be a "God of War" competitor, but unfortunately Ninja Theory is only an AA studio.
The main thing is that State of Decay 3 is still coming out.
The only ones currently making good headlines are really just Nintendo.
None of the currently announced games will be canceled and are currently continuing until their release. Ninja and Undead have been sold; the jobs and the games are financially secure. Furthermore, Double Fine and Complsion are independent again.
Julian Misanthrope: Just because a studio is independent doesn't mean it's safe. They'll still be closed.
Robi Zuber's independence in this context means they are working completely on their own again and are independent. There are a lot of studios like this, and sure, they could eventually close down, but that's no longer in Xbox's hands. The contracts with Xbox were therefore terminated, and they apparently didn't want to sell to someone else like Ninja Theory or Undead Labs, so they made themselves independent of publishers again and are working without a corporation breathing down their necks.
Then State of Decay 3 will probably come to the Playstation sooner or later…