Microsoft announced layoffs of around 4,800 employees, or 2.1% of its global workforce, on Monday, with Xbox and commercial sales hit hardest. According to internal memos shared with staff, 1,600 roles will be cut at Xbox today. The move is part of a broader restructuring effort to align with evolving customer needs and technological changes. Amy Coleman, EVP and chief people officer, emphasized that the roles being eliminated are not being replaced by AI but noted that AI is changing how work is done. "Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves," Coleman wrote. Source: techcrunch

The layoffs are part of Microsoft’s ongoing restructuring, which includes shifting focus to core strategic pillars like Mojang and King, the businesses behind Minecraft and Candy Crush. The company is also flattening its management structure, reducing the current 14 management layers to no more than five, ideally three. Helen Chiang, a longtime executive, will serve as chief operating officer with end-to-end profit and loss authority across content, hardware, platform, and services. According to Asha Sharma, CEO of Xbox, the cuts are "the most significant restructure in Xbox history," with 3,200 additional cuts expected through fiscal year 2027. "Our business today is not healthy," Sharma wrote, citing margins that are 3–10x lower than comparable platform and publishing businesses. Source: techcrunch

The layoffs come amid a shrinking gaming industry and increased investment in generative AI. Companies like Google DeepMind, World Labs, General Intuition, Luma AI, and Runway are exploring commercialization opportunities in gaming. Microsoft’s restructuring also includes transitioning four gaming studios to new management, with Compulsion Games and Double Fine Productions returning to independent status. Ninja Theory and Undead Labs will operate under new ownership with funding to complete and grow their popular games. Source: techcrunch

Source: techcrunch