Job cuts in the Xbox division

Microsoft has once again announced a significant round of job cuts affecting its Xbox division. This comes after three previous rounds of layoffs over the past 18 months, and coincides with the company’s fiscal year-end adjustments.

About Microsoft Xbox

Xbox is Microsoft’s video gaming division, responsible for designing, developing, and selling the Xbox game consoles, games, and related services like Game Pass and Xbox Cloud Gaming. Led by Phil Spencer, Xbox also includes the studios Microsoft acquired through the Activision Blizzard deal, making it a major force in global gaming.

What’s Happening with the Job Cuts

In late June 2025, Microsoft confirmed plans for another major round of layoffs in the Xbox division, marking the fourth significant cut since early 2024. Reports indicate that thousands of employees—potentially up to 2,000—will be affected.

These additional layoffs follow earlier cuts in May that impacted over 6,000 roles company-wide, including Xbox, and hundreds more earlier in June.

 

Why the Cuts Are Happening

The job reductions are part of a broader internal reorganization aimed at improving cost-efficiency and focusing on priorities like artificial intelligence investments—Microsoft is spending around $80 billion on AI infrastructure this fiscal year.

Specifically for Xbox, leadership is under pressure to boost profit margins following the $69 billion acquisition of Activision Blizzard in 2023. The company is reorganizing Xbox operations (including regional distribution in Central Europe), preparing for its next console generation, and shifting focus to cloud and subscription services.

Previous Layoff Waves in Xbox

• January 2024: ~1,900 roles eliminated at Activision Blizzard and Xbox post-acquisition.
• May 2024: Closure of game studios like Tango Gameworks and Arkane Austin.
• September 2024: ~650 jobs cut within Xbox corporate/support roles.
• May–June 2025: Over 6,000 jobs cut across Microsoft, including Xbox, followed by hundreds more.

What This Means for Xbox Employees

Employees impacted by these cuts may receive severance packages based on role and tenure. While Microsoft hasn’t commented officially, affected teams include hardware, software, sales, marketing, and regional support functions.

For gamers, the changes may result in fewer internal Xbox studios and a shift toward cloud services, subscription offerings, and digital distribution. However, Microsoft remains committed to major initiatives like next‑gen consoles and a unified gaming experience across devices .

Looking Ahead

The new round of layoffs is expected to take effect in early July, aligning with Microsoft’s fiscal year-end on June 30 . While painful, these are part of Microsoft’s long-term strategy to streamline operations, cut costs, and refocus on high-growth areas, especially AI and gaming platforms.

FAQs

What triggered these Xbox job cuts?

Microsoft is restructuring to prioritize AI investments and improve gaming division profits after the Activision Blizzard acquisition.

How big is this cut?

This is the fourth major round in 18 months, possibly affecting up to ~2,000 Xbox-related roles.

Who is affected?

Employees across Xbox—including hardware, software, sales, marketing, and regional operations—are expected to be impacted.

When will layoffs happen?

The cuts will likely begin in early July, immediately after Microsoft’s fiscal year end on June 30.

Will this impact new Xbox games or consoles?

Microsoft says it’s still focused on next-gen console development, cloud gaming, Game Pass, and digital distribution despite these cuts.

How does this fit into the bigger tech industry trend?

Like other tech giants, Microsoft is cutting staff to realign after pandemic-era hiring sprees and invest heavily in AI infrastructure.