Microsoft's Xbox division is eliminating 3,200 positions, the company confirmed this week, in what amounts to the most significant single restructuring the gaming unit has undergone in a quarter century.
The cuts arrive in two tranches. The first 1,600 departures took immediate effect. The balance follows in a subsequent phase, with timing unspecified in the company's internal communications.
Xbox CEO Phil Spencer delivered the news to staff directly, his message circulated widely enough to reach Deadline, which reported the story Friday. Spencer's language was not dressed up: “Our business today is not healthy,” he wrote, by Deadline's account of the communication.
The announcement lands roughly 30 months after Microsoft closed its $68.7 billion acquisition of Activision Blizzard — the largest transaction in the history of the games industry — and less than a year after a separate round of approximately 1,900 Xbox-adjacent layoffs in January 2024.
Microsoft has not yet specified which studios, titles, or support functions absorb the majority of the 3,200 reductions.
Spencer's memo did not use the word “restructure.”