|
“Our business today is not healthy,” said a memo from Xbox CEO
Asha Sharma, who took over the gaming division earlier this
year. “We are operating at margins that are 3-10x lower than
comparable platform and publishing businesses.”
Sharma said the industry, in which Xbox competes with Sony's
PlayStation and Nintendo's Switch, is facing a severe “hardware
crisis” as costs soar for console components.
Beyond the layoffs announced Monday, Sharma said Xbox expects
another 1,600 job cuts over the course of the fiscal year that
began last week. The company is also spinning off four video
game development studios previously acquired by Microsoft.
Nearly three years ago, Microsoft closed a $69 billion deal to
acquire gaming giant Activision Blizzard, maker of “Call of
Duty” and other blockbuster franchises. The company said at the
time it wanted to broaden its game development portfolio and
offer a Netflix-like streaming subscription service, but the
strategy doesn't appear to have been enough to get ahead of the
competition.
“While those businesses have created meaningful value, they did
not grow at the pace we expected,” Sharma said.
The Xbox cuts are in addition to broader Microsoft layoffs that
the software giant's chief people officer Amy Coleman tied to
unspecified changes in customer needs.
“I also want to be direct that the roles eliminated today are
not being replaced by AI,” Coleman wrote in a blog post.
The layoffs followed voluntary buyouts that Microsoft began
offering to about 8,750 people in May. More than 30% of eligible
workers accepted those voluntary retirement offers, Coleman said
Monday.
All contents © copyright 2026 Associated Press. All rights reserved
|
|
