Microsoft Lays Off 4,000 Xbox Employees in Major Restructuring

The layoffs, announced internally on Thursday, will affect employees across the Xbox division, including staff at ZeniMax Media and Activision Blizzard, which Microsoft acquired in 2023. The company said the cuts are part of a broader effort to streamline operations and prioritize investments in artificial intelligence and other high-growth areas.

As part of the restructuring, Microsoft is closing several game studios, including Arkane Austin, Tango Gameworks, and Alpha Dog Games. The company is also folding Roundhouse Games into ZeniMax Online Studios. These moves are expected to result in the cancellation of some in-development projects, though Microsoft did not specify which ones.

In a memo to employees, Matt Booty, head of Xbox Game Studios, said the decisions were difficult but necessary to ensure the long-term health of the gaming business. He emphasized that Microsoft remains committed to bringing more games to more players, but acknowledged that the industry is facing significant challenges.

The layoffs come just months after Microsoft completed its $69 billion acquisition of Activision Blizzard, a deal that was the largest in gaming history. The company has been under pressure to cut costs and improve profitability, especially as the gaming market has slowed following a pandemic-era boom.

Affected employees will receive severance packages and career transition support, according to the company. Microsoft said it will work with impacted teams to ensure a smooth transition, though it did not provide details on the timeline for the departures.