Microsoft just took a chainsaw to its Xbox division. The company announced on July 6 that it’s eliminating approximately 4,800 jobs across the organization, roughly 2.1% of its global workforce, with 3,200 of those cuts landing squarely on the gaming side of the house.
Half of the Xbox layoffs, about 1,600 positions, took effect immediately. The rest will phase out as Microsoft divests or spins off four gaming studios, with a fifth studio currently under review and potentially facing closure altogether.
A $68.7 billion bet gets a margin check
Microsoft spent $68.7 billion acquiring Activision Blizzard, one of the largest deals in tech history. Now the company is essentially admitting that its gaming business, even after absorbing one of the industry’s biggest publishers, still can’t generate returns that justify its cost structure.
Xbox CEO Asha Sharma characterized the division’s margins as 3 to 10 times lower than comparable platform and publishing businesses, calling the situation a necessary “reset.”
