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Xbox performs a ‘reset’, but can it get it working again?
Microsoft’s gaming subsidiary laid off 1,600 employees on Monday, with… An additional round of layoffs is expected before June 2027according to an employee memo from Xbox CEO Asha Sharma. The layoffs are part of a massive restructuring by Microsoft, which is cutting about 2.1% of its total workforce, or roughly 4,800 employees.
The roughly 350 people affected are from four game studios that Xbox plans to offload to outside management: Compulsion Games, Double Fine, Ninja Theory, and Undead Labs, all of which were purchased within the past eight years. A fifth company, Arkane Studios in France, could also be sold or spun off.
Sharma, who took over Microsoft’s gaming division in February, said in her statement that Xbox’s business operations are “not healthy,” that costs are too high and the customer base is too low. She said Game arcade – A monthly subscription that provides access to the Xbox game collection – and the company’s in-house game collection wasn’t growing fast enough.
Over the past few months, Sharma has seemed to acknowledge Xbox’s weaknesses and pushed changes to address them, including… Reduce the price From the subscription service.
Xbox has had a tumultuous history, rising to dominate previous generations of consoles before falling to Sony and Nintendo in the past decade. The original Xbox console was launched on November 15, 2001, to compete with Sony’s PlayStation 2 and Nintendo’s GameCube.
During Xbox console sales They were at or near number one in the United States During the Xbox 360 era in the early 2010s, through the previous and current console generation defined by the Xbox Series It is now the global market leaderaccounting for nearly half of total sales, with Nintendo Switch sales at 27% and Xbox sales at 23%.
What happened to xbox
In a video titled “How things got so bad at Xbox“, Bloomberg reporter Jason Schreier argues that Xbox’s current turmoil is the result of inconsistent strategy, shifting priorities and a late-stage push for profitability after massive spending.
Schreier traces Xbox’s decline from a console-first company to a sprawling, internally conflicted enterprise with hardware, software, subscriptions, and studios going in different directions, not to mention expensive acquisitions. Microsoft buys $68.7 billion from Activision Blizzard in October 2023 – the largest acquisition ever in the video game industry – was followed by repeated acquisitions Xbox layoffs and game cancellations.
In a Bloomberg Live In an interview last month, Sharma said Xbox had become too broad and complex, and he was looking to reset the business by focusing on core priorities and long-term sustainability. Sharma said the company needs to look at how it invests, how it prioritizes change and how it works to return to growth. In what appeared to be an attempt to reassure investors and partners, it described Activision and other studios as “amazing assets” and said Xbox would continue to invest in them.
But critics and media critics are skeptical about this. Video game reviewer Max Shockley, who DreamcastGuy YouTube channel It has more than 250,000 subscribers, and Xbox says it has abandoned being a competitive platform. “Games are already released half-finished, buggy, or outright flops. Reducing headcount won’t lead to a more polished product,” he told CNET.
Shockley said it would be very difficult to develop for Xbox Helix projectwhich is the codename for the next-gen console that is designed as a hybrid to play both Xbox titles and PC games.
“Going into a new generation of consoles with the lowest tier of studios and literal billions being wasted for zero-sum growth is completely unsuccessful. I think their next-gen console will either never be released or will be completely built by someone else,” Shockley said.
End of the road
Fans weren’t happy with the news either. In a Reddit thread Regarding the restructuring, Xbox fans have mostly derided the company’s repeated cycle of buying and cutting studios, calling it corporate hypocrisy or the “circle of life” of big tech companies. While some commentators acknowledged that the move might make business sense, others expressed extreme disappointment with Microsoft and Xbox’s leadership.
CNET managing editor David Lomb said that even if the layoffs please shareholders, the decision destroys trust with players and leaves developers paying the price: “It’s terrible for Xbox CEO Asha Sharma to aspire to a billion Xbox players daily while disrupting the lives of thousands of developers who make entertainment to achieve those goals,” Lomb said.
Even if Xbox survives in the long term, this will not “encourage faith in a wobbly platform that rushed to acquire studios full of talent and then abandoned them.”
Shockley considers the future of Xbox more risky, calling it “the end of the road” and pointing out that budget cuts, layoffs and studio closures never magically inspire profitable results. “Xbox tried to buy its way to the top of the industry, but Icarus’ wings withered before it reached the heights it needed to,” Shockley said.
What’s the next step?
For players looking to release new titles, Sharma said there are deals in place for the new owners of Ninja Theory to release its next game, Senua, and for Undead Labs to continue developing State of Decay 3.
There will also be discounts and changes at other Xbox consoles, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios, Sharma said. She said that all publicly announced first-party games or projects are still happening.
A month ago, on June 7, Xbox promoted Senua – the third game in the Hellblade series – at its showcase. Xbox games gallery. Longtime video game reporter Stephen Totilo of Game File wrote that according to a source, Xbox “I had already planned for sunset or separation from the studio“Before Senua was announced.
