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by Debora Pape
Microsoft cuts 9000 jobs: studio closures shake Xbox division
3.7.2025
Translation: machine translated
Microsoft is cutting around 9,000 jobs worldwide, around 4 per cent of its workforce. The Xbox division is particularly affected: studios are being closed and games discontinued. The company is talking about "focussing and efficiency", but questions remain about the strategy.
Microsoft's gaming division is facing a profound upheaval. In recent days, the company has announced a comprehensive restructuring programme that not only affects several studios, but also results in the discontinuation of numerous game projects. A total of around 9,000 jobs will fall victim to the cost-cutting programme: a significant proportion of these in the Xbox and gaming sector.
These studios are affected
The most prominent victim is the Californian studio The Initiative, which was founded in 2018 with much advance praise and top talent from across the industry. The development team last worked together with Crystal Dynamics on the reboot of «Perfect Dark». Now the studio is being closed completely, «Perfect Dark» is officially discontinued and Microsoft is also ending its partnership with Crystal Dynamics.
The traditional British studio Rare is also losing an ambitious project with the cancellation of «Everwild». Although Rare has enjoyed many years of success with «Sea of Thieves», Microsoft is pulling the plug on the new IP. As a consequence, game designer Gregg Mayles is leaving the long-established studio after 35 years.
Mayles is one of the most influential and experienced game designers at Rare. He was instrumental in titles such as «Donkey Kong Country», «Banjo-Kazooie and Tooie» and, last but not least, «Sea of Thieves».
In addition, the previously unannounced online role-playing game codenamed «Blackbird» from Zenimax Online Studios will not be developed further. The long-standing studio manager Matt Firor subsequently announced his resignation.
Dismissals at well-known teams too
Not only entire studios, but also established development teams are not spared from the cutbacks. At racing game developer Turn 10 Studios, known for the Forza Motorsport series, over 70 employees are losing their jobs. According to internal sources who told The Verge, the remaining team is just enough to keep operations going.
The Xbox User Research team is also being significantly downsized. Almost half of the workforce will have to leave. Other cuts include the Xbox Family and Child Safety team.
Microsoft's reasoning: Focus and efficiency
In an internal letter, Xbox Game Studios boss Matt Booty explains that the measures are necessary in order to pool resources and focus on projects with long-term potential. The aim is to better adapt to the changing market conditions and set the course for future success. The company still has over 40 projects in development and sees a strong portfolio for 2026.
In my opinion, the statements sound like the usual platitudes. Microsoft is one of the most profitable companies in the world. In the first quarter of the current year alone, the company made over 70 billion dollars in sales, with a profit of over 25 billion dollars. Both «Perfect Dark» and «Everwild» were no small projects. Microsoft throwing everything away after several years of development does not necessarily speak for good planning. After teasing such projects, the trust of gamers also dwindles.
In particular, developers say that Microsoft is doing everything it can to replace as many jobs as possible with AI agents. A worrying development. My colleague Debbie recently wrote about why she thinks gamers are right to protest against the increasing use of AI:
Header image: Robert Way / Shutterstock.com
My interests are varied, I just like to enjoy life. Always on the lookout for news about darts, gaming, films and series.
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