Xbox Announces 3,200 Job Losses And Four Studio Departures

"Compulsion and Double Fine studios will become independent; Undead Labs and Ninja Theory will be sold. Xbox will also look to sell or spin out Arkane Studios."

It is worse than I was expecting.

Hope you all like Halo, Gears and Forza because that’s what you’re going to be force-fed for the foreseeable future.

Well here it is, the news we were all waiting for. Not surprised by the studios tbh.
What is crazy is that it only accounts for 2.1% of the entire Microsoft workforce!

I’m glad that they have managed to go independent/new investors.

But damn that’s some studios going.

Guess the rumours were pretty much bang on.

The studios remaining open (for now) and no game cancellations are positive outcomes. I dont think being independent is a enviable position right now but its better than being shutdown.

My initial impression, this is not the doomsday event I thought it was going to be. It sucks about the layoffs but I expected multiple games canceled and multiple studios to no longer exist. Xbox is really only losing some of the more AA studios but gamers are not losing them.

The video game industry is already crashing.

Sad news but it's got to be done in order for Xbox to survive. Now add a disc drive to Helix to smash PS6 to smithereens!

Microsoft is cutting approximately 20% of the Xbox division's global workforce

Ah man this is the worst possible outcome then, I do hope Arkane Studios are able to continue in some shape or form.

Glad to see the studios look like they will all still exist. Sad for the job losses. But that is the state of the gaming industry today.

Hopefully this is the end of it and XB builds from here. Would like to see XB start announcing that more stuff will go exclusive.

This is actually better news than I expected with studios being spun off or sold rather than just outright closed. I hope all employees affected by the layoffs find new positions.

I’m just glad they didn’t shut any studio down. Sure it sucks not having these under the Xbox banner, but it would suck more if it meant everyone working for them were out of a job

It's also worth noting that Microsoft have offered voluntary retirement for the US.

Me too @NeoRatt. I think what has caused some of the harm here is that the studio were left to do what they wanted, and it has not worked out.

Brutal as expected, Double Fine and Compulsion becoming indies, Ninja Theory and Undead Labs sold, Arkane looking for a buyer otherwise will close, this year’s showcase truly was an auction but it’s a much better outcome that studios remain alive in some way rather than being closed outright.

However we’re also getting the ultimate acceptance that both Game Pass and being multiplatform didn’t grow as expected and in fact ate into the core business (people leaving Xbox or stop spending on it), all the things many of us have warned for years now, if anything they’re finally being transparent about just how mismanaged Xbox is, I mean 14 layers of management makes it impossible to accomplish anything, not sure if changes will actually reflect on more and better games but a reset internally on how they operate was very needed.

I think I’m officially done with Xbox and its brand. I just can’t anymore.

I hate to see the studios leave but with how this industry operates with the studio closures, having the studios remain open and funded is a great thing

Still bad but not quite as bad as people thought it was gonna be.

At least so far no studio has been shut down.

Layoffs still suck and will put a stain on the brand for now.

It had to be done. Phil & Sarah left Xbox in a Mess with insane Mis manage!! It all sucks but Xbox is a business not a Charity!

It's the industry theses days it's happened before it will happen again after this not just Microsoft either I'm really not surprised anymore.
Too many studios too many devs oversaturation of the market.
Life is hard enjoy gaming real life politics is hard enough without being effected by gaming politics.
Unfortunate for the people effected but unfortunate things happen to people everyday I've been sacked before aswell life goes on😊

@Tdx Oh sure, thousands of people losing their jobs is a good thing. You callously respond to that, but "fear game pass will be on the chopping block" lol.

Hey, at least 2 of them aren't closing. MS was not managing Double Fine well at all.

In addition, Compulsion Games (We Happy Few, South of Midnight) and Double Fine Productions (Psychonauts 2, Kiln) are transitioning to independent studios, while Ninja Theory (Hellblade) and Undead Labs (State of Decay 3) are being sold off. Arkane Studios (Marvel's Blade) is also reviewing strategic options.

So not as bad as expected. Compulsion Games was rumoured to be closed down. Some "leakers" even included Obsidian on their list, not to mention the cancellation of many announced games. There have been so many sponsored Youtubers and "journalists", lies and toxicity surrounding Xbox lately. Asha had previously said that they'd like to invest more resources in their key IPs and studios, so hopefully it means a better performing business. And no, Game Pass is not the culprit because South of Midnight flopped on Xbox, PS5 and Switch 2.

My favourite of all the affected studios is Undead Labs, so I will still support their releases whoever the new parent company is.

@ZeD
Ya, the hope here is that those 1,600 immediate jobs were from studios multi-platform groups. the official press release also mentions that in some cases there were 14 layers of management. That is too much in almost every organization and they said they want to reduce that to 3-5.

I really liked this comment in the official release:

"In addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX."

This could mean that there will be enhancements/exclusiveness on these two games that will make better on XB vs other platforms. Hopefully the rest of the studios will eventually do the same.

I'm glad the studios are not being shut, but it feels like as an Xbox owner and Game Pass subscriber this will reduce the value of Game Pass, if all these teams' future games skip the service (and that's assuming those already announced for Game Pass still join)

Bother better and worse than I'd feared.
On the one hand, I'd hope they'd only actually lose maybe 2 of them, with the excess being rumours that got out of hand.

On the other hand. I was sure at least one (Compulsion most likely) would shut, so that's a win at least.

Arkane still being on the chopping block, and likely leaving as well even if they stay open is the real bummer.

@IronMan30 Four of them aren’t closing. Two are going independent and the other two are being sold.

For people saying at least no studios were shut down.. that is one way to look at it. The other is 4 studios were effectively taken off their problem list and MS sold off their assets and IP to investors that may or may not keep employees. Changing ownership and investors is very close to starting a new company as processes and communication channels inevitably modify. At the same time, those same employees don't fall into category of 3200 fired by MS.

No game cancellations and no studio closures — that’s the only positive takeaway, which is already not bad, and we can give Xbox credit for finding solutions for employees.

And this also confirms the sheer number of fake news in recent weeks: cancellations of Avowed 2, Blade, Senua, closure of Ninja Theory, closure of Obsidian (which remains at Xbox), stopping third‑party deals for Game Pass, rolling back exclusives — all fake news.

There is indeed a restructuring at Xbox, in line with Asha Sharma’s initial announcement, but all the rumors that followed were basically nonsense.

As for the 3,200 positions, if I understand correctly, it’s far from being only layoffs (@FraserG could you clarify this point ? ). Since no studio is closing, it’s more about roles no longer under Xbox’s direct management, which is quite different. We’re waiting for official details from Asha Sharma directly, and also on potential partnerships with the studios that become independent, details on the IPs , and the franchises they’ll focus on, etc.

That said, it’s a shame they didn’t give Ninja Theory a chance — they have a unique know‑how. Same for Arkane, from which I expect a lot with Blade, even if objectively Arkane hasn’t done much in many years, and the French studio probably costs a lot for not much return. Compulsion Games too, big potential in my opinion, sad to see them go. And as for Undead Labs, State of Decay 3 seems very promising and could have revived the studio — too bad they didn’t wait a bit longer before parting ways.

@InterceptorAlpha I was expecting the studios to be shut like is normal in this kind of scenario.

the 4 studios will remain open and even have their IP which is incredibly rare thing to happen usually IP is kept by the owner

The number of employees losing jobs is lower than the reported number because that’s the number of jobs Microsoft is cutting. Some of the jobs will continue with the newly independent studios. Others with the whoever bought two of the studios.

i expected far worse. I heard bloodbath WAY too many times. The fact that none of the 4 being rumored were shut down is actually crazy, because they are able to stay open for the short term.

Also expected way for layoffs.

@IronMan30 psychonauts 2 probably wouldn't have been as good as it was without xbox's support. They gave them a lot of money and extra time to make the best game possible.

Otherwise I agree, double fine is probably going to make better content if they have to worry about finding someone to fund it. It should lead to better ideas being pitched than Kiln.

@InterceptorAlpha What were you expecting? I'm glad all four studios are not going to be shut down.

@BacklogBrad Kiln is fun though.

@NeoRatt first of all, thanks for that link. I will give it a read later.
As for 14 layers of management… what the heck?! That’s insane. That could easily become 14 meetings for one issue! No company would want that!

@Balaam_ Halo, Gears, Forza, etc... Those are the games that perform, so yes, consumers will continue to enjoy them.

Forza 6 is already a massive hit.

UNDEAD LABS has been a mess. But allowing them to be independent and funding to complete SoD3, it will allow them to be Multiplatform.

I was expecting this to be a lot worse, not in terms of job numbers as that is still terrible but it does sound like the business is hugely inefficient with it's staff/management structure. At least no studios have been closed and have the opportunity to carry on, whether that be independently or under new ownership.

As for Asha, this does seem like the first time in years that the person in charge has a plan moving forward and is going to be making people accountable within Xbox

@Lanmanna but the problem is you were 1 out of the 200 playing it, it didn't perform or find an audience.

I also found this comment very interesting in the release:

"We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected."

So, GamePass and multi-platform didn't do as well as expected. Today's announcement fixes the broader portfolio not doing as well as expected.

I expect there to be significant changes to GamePass and more exclusive announcements based on these comments.

@Tdx What a wild take. "This is good news! Less games means you won't complain about your backlog anymore! Who cares if people are losing their livelihood!"

A majority of these studios weren't releasing big budget AAA titles. I also like how you threw out "7/10" as if that's suddenly a bad thing. Plenty of great 7/10 games, which is entirely subjective btw.

I'm glad if these studios can stay open. XBOX overstretched.

Breakdown of jobs "3200" can mean a fair spread between these studios we were told expect tough decisions still not good news gaming is at a loss all over atm when will it stop?

@NeoRatt Right. Some people tend to forget that the infrastructure had to be simplified after the ABK acquisition because there were many duplicated departments and positions. In this case, not only these acquisitions didn't work out as expected, but the infrastructure was still bloated unnecessarily. It's unfortunate when people are made redundant, but it happens in every big business, including Sony, Ubisoft, Tencent, Embracer...

@Nall3k I know. I was just pushing back on the "It should lead to better ideas being pitched than Kiln" point.

As to your point...People always complain about too many sequels, prequels, remakes, ports, remasters, but that's what sells, sadly.

Awful news for so many. I hope the many talented people being let go land on their feat with minimal stress and few sleepless nights.

@Banjo- Which is why I hate mergers and acquisitions. And I'm not just talking in gaming. A vast majority just create a crappier company, more consolidated industry, and reduction of jobs.

@LaurenceJ1987 Good point about Game Pass content, but from their point of view, it's infinitely cheaper to sign Game Pass deals with Double Fine and Compulsion, both becoming independent now, than paying 8 years of development for short games.

I left Xbox the last time they said they weren't doing disc drives and went to Sony (they eventually reversed course but not before alienating many gamers). And now that Sony announced they won't be doing it, I would definitely leave their camp at PS5 and go back to Xbox if Xbox decides to do it.

I don't understand when it became acceptable for people to not want to own the things they are buying but I will never be a part of that camp. We just saw how that can turn out with Sony removing tons of bought digital content (movies) from people's systems on a whim because they had the power to do so.

On top of that, backwards compatibility requires it.

@FraserG I asked Jez Gorden in threads if the 3200 job reductions include all the staff that will move into the 4 divested studios. He seems to think they are counted. So it's not 3200 jobs lost, just 3200 jobs no longer at MS.

Obviously there are some actual losses, especially in middle managment (or at least thats the only area specifically mentioned), and some of the divested studios might also reduce workforces, but it seems at least for now the sum of employees from those 4 studios are not "lost jobs" (yet).

@Kraven Then PC for you? Switch? The only company printing money is Nintendo. Their employees got raises.

While it is never good to see or hear about layoffs, i actually expected it to be a lot worse so i am a little releaved it is not worse.

"neither possible nor desirable to own every great independent studio"

So why buy them then?

@MinervaX76 That’s how I understood it too — we don’t yet have the breakdown between positions truly eliminated and those simply moved under new management.

I was also quite surprised when Asha mentioned in her tweet that sometimes there are up to 14 layers of management, which is huge, and in that case justifies a simplification (ideally 5 or even 3, according to her tweet).

@PartyMarty

Ah man this is the worst possible outcome then, I do hope Arkane Studios are able to continue in some shape or form.

I would say this is far from the worst outcome. So far none of the studios has been shut down, and the 3200 number includes the people tha are leaving MS but going into the devested studios. Worst outcome would had been all the games getting canceled, these studios being shut down, and all 3200 jobs being simply fired.

What i dont understand is why doesnt Sony allow their studios to go independent or sell them to other publishers?

Xbox and Embracer are the only two publishers i can think of that actually negotiate buyouts with their studios while the others just flat out shut them down. AND they get to keep their IPs.

More companies need to look for other solutions ...

@themightyant over 2000 a year for 4 years definitely isn’t a good look. I guess the blame should really lye with Phil. I wonder what he’s thinking about this while laying on his yacht sipping champagne.

@datamonkey You would need to ask Phil Spencer that question...

@ZeD true but he’s not answering my calls 🤣

So happy the studios weren’t closed down. Compulsion in particular. I do hope a new game in the south of midnight world can be created. I would love to join Hazel on another adventure. Hoping all the people that lost their jobs land on their feet.

@datamonkey
At the time they bought them they had a strategy. That strategy failed, so they are correcting the issue. All of these studios (except Arkane) were purchased individually. While there is the idea of purchasing competitors to take them out of the marketplace and make them disappear, this obviously is not the case here, because they are letting them go back on their own.

@RareXDKR it has not been confirmed that 3,200 have lost their jobs. It is currently reading (elsewhere) that they are jobs no longer at Microsoft.
Either way, what has happened today is definitely bad for those that may have lost their jobs (if they have that is) but for Xbox, and it's gamers, I see it as a positive step forward. They have found problems, addressed them and set out a plan. Like any good business should.
They could have buried their head in the sand and ran the business into nothing.

Just a quick edit: re reading the announcement and Asha says 'role eliminations'. This could mean firing, retiring or moving on

@datamonkey maybe he is sitting in a hotel somewhere looking at the news and thinking 'did I do that?' 😂

@ZeD hah yeah either that or “it was nothing to do with me” 🤭

@NeoRatt She also confirmed that the "other" platforms all have exclusive content and that they need to invest more in their key IPs and studios before this statement, so I expect more exclusives and a better received first-party output.

I mean to be honest the studios that they are getting rid of I can honestly say I've never played any of their games. If anything I'm more of a mainstream game kind of guy not off brand style games. As long as you're not getting rid of their AAA studios that make popular games I think us as gamers are good.

A lot of people are calling this bad, and it is bad.

But, at the end of the day these 3,200 job losses are in the following areas it won't be as bad as people think:

1) Studio divestitures.
2) Reduce management layers.
3) Reducing people working on multi-platform versions of games so they become XB exclusive.
4) Consolidate marketing out of studios and centralize it.
5) Consolidate things like battle.net into the XB infrastructure making it more centralized.

Then things will be ok. The concern I will have is if they are laying off people that are building the next games XB is focusing on.

@Z1G Aside from owning the Series X, I have a Switch 2 and PS5, so I think those two consoles should keep me plenty busy.

@Banjo- Very true. And I hope that's still a possibility, benefiting Game Pass and giving some vital funds to the studios. I guess time will tell.

@NeoRatt why would you like less people to be able to access certain games? How does that benefit you as a consumer in any way?

So it turns out it was not "fake news" after all. The studios have been spun out or sold off as expected and Arkane is also on the ropes. The only rumour not to happen was Obsidian, the rumour that was denied very rapidly by Jason. As expected however, right on cue the "fake news" crew are out to say its not all that bad actually.

It a sad conclusion to everyone involved, hopefully they find success as indies or under new management.

It remains to be seen how bad this really is. If these studios can truly survive independently or with new owners then they are better off without Microsoft and their horrific mismanagement. What I want to know is how many people have been left without any job after this? Still hundreds and maybe thousands I imagine, which is utterly shameful.

Just a horrible situation all round. There are no winners here, despite how some in the comments will try and spin it.

@datamonkey

So why buy them then?

Timelines. Those studios were bought when xbox was starting to expand, running on a much more limited budget and trying to prove itself to upper management with GamePass. They did not have the exec favor at that point to get a green light on acquiring anything larger than these studios.

@awp69 eventually those sold could close so I hedged my statement but I guess by that logic they all could so you're not wrong.