Microsoft to cut jobs across Xbox division in fresh layoff round
Microsoft Corporation is set to make another wave of job cuts next week, with its Xbox division facing substantial layoffs as part of a broader restructuring initiative. The decision marks the fourth major round of layoffs to hit the gaming arm in just 18 months, signalling deeper concerns within the tech giant’s video game operations.
The news was first reported by Bloomberg, which cited internal sources revealing that managers across the Xbox division have been informed to expect significant cuts. The Xbox unit — responsible for Microsoft’s gaming consoles, first-party studios, and other entertainment platforms — has been under increased pressure to improve profitability following the company’s $69 billion acquisition of Activision Blizzard Inc. in 2023.
This latest development comes close on the heels of earlier reports indicating Microsoft’s intentions to eliminate thousands of positions in its sales and customer-facing roles by July 2025. The company had already cut around 6,000 jobs in May, and the total tally of job eliminations across departments now stands at nearly 7,000 workers over just the past two months.
The Xbox team has been one of the most impacted divisions within Microsoft. In January 2024, the company fired 1,900 employees at both Xbox and the recently acquired Activision Blizzard. Later, in September 2024, Microsoft eliminated an additional 650 positions within its gaming unit. Previous layoff rounds also led to the closure of several Xbox subsidiaries, dealing a heavy blow to the division’s long-term capabilities.
While no official statement has been released by Microsoft, the restructuring appears to be aligned with a broader shift in corporate strategy — one that favours leaner teams and outsourcing. In April 2025, Microsoft had announced it would rely more heavily on third-party firms for selling software solutions to small and mid-sized businesses, paving the way for reductions in in-house sales teams.
The tech industry at large continues to experience turbulent times. Even the world’s most profitable firms are reevaluating their cost structures amidst slower growth forecasts and rising demands for profitability. Microsoft, with its vast portfolio ranging from enterprise software to cloud infrastructure and consumer gaming, is no exception.
However, the repeated rounds of layoffs within the Xbox division — once viewed as a key pillar for consumer engagement and future metaverse initiatives — raise concerns about Microsoft’s long-term gaming strategy. Analysts note that while the Activision Blizzard acquisition was a historic one, the expected synergy and growth from the deal have not yet translated into visible financial gains. This may have prompted Microsoft’s leadership to take a tougher stance on cost controls within the gaming vertical.
The upcoming cuts are also expected to deepen concerns among employees. With several waves of layoffs in a relatively short period, internal morale is reported to be strained, especially within creative teams and development units. According to Bloomberg, many employees within the Xbox ecosystem remain unsure about their future roles as restructuring discussions continue.
In broader terms, Microsoft’s aggressive trimming reflects a trend among major tech companies attempting to streamline operations post-pandemic, as the boom in tech hiring from 2020–2022 now gives way to fiscal discipline and efficiency.
As the company prepares to reduce headcount yet again, all eyes will be on whether Microsoft can strike the right balance between cost-cutting and sustaining innovation, particularly in a highly competitive and emotionally invested domain like gaming.