Microsoft’s Xbox division just laid off thousands of employees, shut down an entire game studio, and canceled multiple projects, even as the company insists that everything has never been better.
In the new AI economy, it seems no job is safe, not even at a thriving business. Microsoft’s Xbox division is a case in point. Last quarter, its revenue soared by 8% year over year. And yet, the division is now at the center of the tech giant’s largest wave of layoffs since 2023, with thousands of its employees among the 9,000 jobs cut by Microsoft on Wednesday.
In a memo sent to his shell-shocked employees and reviewed by Gizmodo, Microsoft’s head of gaming, Phil Spencer, performed a masterclass in corporate doublespeak. He announced a massive new round of layoffs across the Xbox division, all while insisting that business has never been better.
“I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before,” Spencer wrote. “Our platform, hardware, and game roadmap have never looked stronger.”
Xbox’s Phil Spencer confirms layoffs impacting Microsoft Gaming unit in an internal memo shared with staff.
« To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business. » pic.twitter.com/9x5bHmNibZ
CharlieIntel (@charlieINTEL) July 2, 2025
And yet, in the same breath, he confirmed that thousands of jobs would be eliminated and that the company will “end or decrease work in certain areas of the business.” A separate memo from Xbox Game Studios head Matt Booty made the damage concrete: long-awaited, ambitious titles like Perfect Dark and Everwild are being canceled, and at least one studio, The Initiative, one of Microsoft’s newer, high-profile studios, is being closed entirely.
