Xbox is planning a major wave of layoffs next month, according to a Bloomberg report.
This comes from multiple sources speaking to Bloomberg, who said the layoffs are expected after the end of Microsoft’s fiscal year on June 30, alongside other spending cuts to marketing and other areas. The number of individuals who will be impacted is not yet known.
In an email allegedly sent to employees today, CEO Asha Sharma said that the division had spent $20 billion on content investments in the last five years, not including Activision Blizzard King (which cost Microsoft $69 billion). However, its annual revenue declined “nearly half a billion” over the same period, and its business has apparently dropped to a 3-percent “accountability margin,” or profit margin.
“We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming and devices,” Sharma continued. “In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.”
Some would argue the writing has been on the wall since Sharma took over the division in February. Sharma has been vocal on the interview circuit about the need to make “hard choices” and the idea of a “reset” for the business. Up to now, that’s largely involved dropping the price of Game Pass and removing day-one Call of Duty to compensate after the service lost “millions of subscribers” following a price increase last year; rethinking the company’s strategy on exclusives for Gears of War: E-Day and Clockwork Revolution; and suggesting that new business models may be on the horizon for next-gen consoles. Bloomberg also confirms prior reporting that Gears of War: E-Day was originally planned for PlayStation 5 and was already in development for Sony’s console before this change was made, and reports that a Halo trailer that was intended to appear at the most recent PlayStation State of Play showcase was pulled.
This comes almost exactly a year out from the last mass layoff at Xbox, which came as part of larger cuts at Microsoft impacting 9,100 individuals company-wide and which resulted in 200 individuals laid off from Candy Crush maker King, a canceled Perfect Dark reboot and the closure of studio The Initiative, a canceled MMORPG at ZeniMax, and a canceled Everwild with developer Rare being restructured. That layoff was less than a year after another mass layoff of 650 across Xbox, which itself was only nine months after a layoff of nearly 2,000.
Kotaku has reached out to Xbox for comment.
