Microsoft to cut 4,800 jobs, overhaul Xbox unit

On Monday, Microsoft announced that it was planning to lay off 4,800 workers from its global workforce, amounting to about 2.1% of its total workers, as it prepares for a complete overhaul of its Xbox games department by selling five studios in its effort to maximize its returns following many years of heavy investments in the business.

The revamp of Microsoft's gaming division is going to see 3,200 layoffs, out of which 1,600 were laid off yesterday.

In spite of investing billions of dollars in the expansion of the Xbox, including the purchase of Activision Blizzard, Microsoft has been unable to close the gap with Sony's PlayStation as well as Nintendo.

Over time, Microsoft has changed its strategy, concentrating more on the distribution of its games in other platforms rather than focusing on console exclusive games as a way of maximizing the sales of Xbox hardware.

According to Asha Sharma, the head of Xbox, the restructuring will see Microsoft divesting itself from four studios.

"'South of Midnight' developer Compulsion Games and 'Psychonauts' maker Double Fine Productions will become independent studios, and Ninja Theory and Undead Labs will be separated to develop 'Senua' and 'State of Decay 3'," Sharma told employees.

The management of Arkane Studios, which developed 'Dishonored' and is currently working on a game based on ​Marvel Comics character Blade, has started consultations with its workers union in France to review options, she added.

Big Tech's historic AI outlays, set to top $700 billion this year, are piling pressure on companies to show returns from the technology and offset the rising cost of rolling it out across their businesses. Amazon and Meta Platforms have also laid off ​thousands of employees this year.

Chief People Officer Amy Coleman, however, told employees in a memo that "the roles eliminated today are not being replaced by AI."

"At the same time, ​what is true is that AI is changing how work gets done."