Microsoft will conduct another round of major layoffs in its Xbox gaming division next week as part of a broader company-wide reorganization, according to sources familiar with the plans. Managers within Xbox are expecting substantial cuts across the entire gaming group, marking the fourth significant layoff at the division in 18 months.
The upcoming cuts will target thousands of employees primarily in sales divisions, with Xbox bearing a significant portion of the reductions. Bloomberg reported that the layoffs coincide with Microsoft's fiscal year end on June 30, following the company's pattern of making organizational changes during this period.
Microsoft’s gaming division under profit pressure
Xbox has faced mounting pressure from Microsoft executives to boost profit margins since the company's $69 billion acquisition of Activision Blizzard closed in 2023. The gaming division has experienced a series of workforce reductions, including 1,900 layoffs in January 2024, 650 cuts in September, and the closure of several game studios including Hi-Fi Rush developer Tango Gameworks and Redfall developer Arkane Austin.
Sources indicate Microsoft is restructuring Xbox distribution across central Europe, with some regional operations ceasing entirely. The Verge reported that these changes aim to align the business for next-generation console development while streamlining operations.
Third major cut this year at Microsoft; to affect sales and marketing division also
The Xbox layoffs represent the third major workforce reduction for Microsoft in 2025, following 6,000 cuts in May and over 300 additional eliminations weeks later. The company previously announced plans to eliminate approximately 3% of its total 228,000-person workforce as part of efforts to flatten management structure and control costs.
Microsoft's sales and marketing division, employing roughly 45,000 workers, will face the heaviest impact from the upcoming cuts. The restructuring reflects the tech giant's strategy to balance massive AI investments, estimated at $80 billion for data center spending this fiscal year, with operational efficiency across other business units.
Microsoft declined to comment on the planned layoffs.
The upcoming cuts will target thousands of employees primarily in sales divisions, with Xbox bearing a significant portion of the reductions. Bloomberg reported that the layoffs coincide with Microsoft's fiscal year end on June 30, following the company's pattern of making organizational changes during this period.
Microsoft’s gaming division under profit pressure
Xbox has faced mounting pressure from Microsoft executives to boost profit margins since the company's $69 billion acquisition of Activision Blizzard closed in 2023. The gaming division has experienced a series of workforce reductions, including 1,900 layoffs in January 2024, 650 cuts in September, and the closure of several game studios including Hi-Fi Rush developer Tango Gameworks and Redfall developer Arkane Austin.
Sources indicate Microsoft is restructuring Xbox distribution across central Europe, with some regional operations ceasing entirely. The Verge reported that these changes aim to align the business for next-generation console development while streamlining operations.
Third major cut this year at Microsoft; to affect sales and marketing division also
The Xbox layoffs represent the third major workforce reduction for Microsoft in 2025, following 6,000 cuts in May and over 300 additional eliminations weeks later. The company previously announced plans to eliminate approximately 3% of its total 228,000-person workforce as part of efforts to flatten management structure and control costs.
Microsoft's sales and marketing division, employing roughly 45,000 workers, will face the heaviest impact from the upcoming cuts. The restructuring reflects the tech giant's strategy to balance massive AI investments, estimated at $80 billion for data center spending this fiscal year, with operational efficiency across other business units.
Microsoft declined to comment on the planned layoffs.
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