Microsoft's gaming division may be preparing to close one of its studios as part of another wave of layoffs, which, according to Bloomberg, is expected next month.
The reason for the new rumors was a memo from Xbox CEO Asha Sharma, published on Wednesday. In her address to employees, she spoke about the difficulties the business is facing. According to her, Xbox's annual revenue has decreased by almost $500 million over the past five years, hardware production costs have quadrupled compared to last year, and the existing structure of gaming studios has become "overly bloated".
Earlier, Bloomberg reported that this letter was sent to employees ahead of significant layoffs within Xbox, as well as cuts in marketing and other operating expenses.
Later, The Verge stated that the upcoming measures might affect more than just personnel. According to its sources, Microsoft is considering closing one of its Xbox studios or a major reorganization of its studio network. Which team might be affected is not yet known.
If the cuts indeed happen, this will be the fourth consecutive year that Xbox has conducted large-scale layoffs amidst a challenging situation in the gaming industry. Over the past few years, the industry has faced tens of thousands of job cuts worldwide.
Last year, Microsoft closed The Initiative studio, which was developing a new Perfect Dark. In 2024, the company also disbanded Arkane Austin (Redfall, Prey), Alpha Dog Games (Mighty Doom), and Tango Gameworks, known for Hi-Fi Rush. Tango Gameworks was later acquired and retained by Krafton.
Currently, Xbox Game Studios includes teams such as The Coalition, Double Fine Productions, Compulsion Games, Halo Studios, InXile Entertainment, Mojang, Ninja Theory, Obsidian Entertainment, Playground Games, Rare, Turn 10 Studios, Undead Labs, and World's Edge.