Microsoft has announced that 3,200 members of its Xbox staff will lose their jobs during the current financial year. 1,600 of those layoffs will occur today, July 6th, while the rest will occur throughout the financial year, with no set or expected period for them yet. In addition, as part of this massive restructuring of the company, four studios on the Xbox Game Studios banner will now be departing the company in search of new management, with one currently in consultation over its future.
In an email that was sent to the staff, current Xbox head Asha Sharma referred to this as the most signifigant restructure in the history of Xbox, insisting in the email that the company’s gaming business “is not healthy.” Overall, Xbox will be losing about one-fifth of its total staff. South of Midnight developer Compulsion Games, as well as Psychonauts developer Double Fine Productions, have both announced that they will undergo the process of transitioning to independent studios. Asha Sharma stated they will all maintain their IP and catalog, with “runway for their next games.” In the case of Double Fine, though, Microsoft will maintain the rights to the Psychonauts series.
In the case of two other studios, Senua developer Ninja Theory and State of Decay developer XboxUndead Labs, both studios “have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3.” This suggests that these studios will maintain their announced IPs, with a chance to release them at some point in the future, under new ownership. There has yet to be an announcement as to who the new owner of either studio is.
Another studio, Marvel’s Blade developer Arkhane, will now see management enter a required consultation with its Works Council to “review potential strategic options,” as stated in French labor law, with outcomes potentially being selling the studio or spinning it out in the future. There have been no statements concerning Marvel’s Blade, which is reportedly running over budget, so it is unclear if Microsoft would retain the IP upon a split.
Layoffs are set to affect multiple studios at Xbox, with Activision/Blizzard, Bethesda/Zenimax, King, Mojang, and Xbox Games Studios itself all being hit. Microsoft has made clear that the status of all first-party titles that have been announced will not be affected, meaning games like Fable, Clockwork Revolution, and Gears of War: E-Day are still set to release on schedule.
These job losses follow an equally devastating round of layoffs that occurred last July at Microsoft, in which 9,000 employees were let go across the entire business. During this period, we saw studios such as Perfect Dark developer The Initiative get shut down, creating a haunting pattern for the closure of the financial year. Sharma has, however, also stated internally that she wants to fast-track development on new titles of the Halo, Elder Scrolls, and Fallout franchises, painting a picture of priorities for the publisher moving forward.
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