This post was put together by GamesBeat’s staff including Alex Lee, Dean Takahashi and Jolie Feld.
Xbox CEO Asha Sharma announced today that Microsoft laid off 1,600 Xbox employees and it will lay off another 1,250 in the next 12 months (Microsoft clarified this number includes 350 from four studios — not Arkane — to be divested). She also said Xbox will part ways with five studios that are either buying themselves back or selling themselves to third parties.
Our staff has collected some reactions from across the industry and among industry analysts. Here they are:
Michael Pachter, an analyst at Wedbush, said in a message to GamesBeat, “I think they were benevolent in focusing on the studios best equipped to survive, and am encouraged that four of them announced a transition to being self-sufficient. Arkane Lyon is up in the air, but this is the best possible result for the studios they were shedding.”
On background, we heard that the five affected studios — Undead Labs, Ninja Theory, Arkane, Compulsion Labs and Double Fine — are in various stages of separation from Microsoft. Those terms are about selling the studios and continuing their games. It’s possible that, once the transaction is complete, that those titles such as Undead Labs’ State of Decay 3 don’t come to Xbox Game Pass anymore.
Gareth Sutcliffe, head of Media Technology & Gaming at Enders Analysis, said in a message to GamesBeat, “This announcement still doesn’t provide any insight as to what the pathway for success is for Xbox, so you have to presume that we’re at that warm up act, not the main event. Building fewer games with IPs that haven’t performed simply won’t be enough.”
He added, “Xbox is probably fortunate that the current FTE shrink target is only 20%, it easily could have been 25%+, and by the end of FY27 it’s possible that is where Xbox ends up, particularly if international operations, which take longer to shrink and aren’t announced, are included.”
And Sutcliffe said, “Asha Sharma’s focus on Xbox bureaucracy and layers is warranted and should be commended, the organizational setup she inherited was sclerotic and weird. How else do you end up with studios such as The Initiative pursuing a title for seven years that was ultimately cancelled? It was wasteful and avoidable, and simply not replicated at that scale anywhere else. Accountability had disappeared. Helen Chiang’s promotion to COO will be enormously beneficial to Asha, bringing fresh perspective but unique inside track as Phil Spencer’s former Chief of Staff.”
Mike Vorhaus, founder of Vorhaus Advisors, said in a message to GamesBeat, “I think the focus is good and I think smaller is good. I would need to know more if I agree with what studios/games they are getting rid of. I certainly thought highly of Asha’s style in the post: transparent and optimistic. I guess it is time for a reboot.”
Caroline Stokes, leadership strategist at Forward, said in a message to GamesBeat, “Today’s Xbox news is a live case study in the poly crisis: AI cost pressure, hardware crisis, and the business model from 2017ish that hasn’t adapted fast enough with player interests.”
Stokes added, “The new horizon looks different. There are two challenges for those that stay, and those that go: reinvention. Everyone needs to become an expert in reinventing their career, product for players, way they work with teams and the way their organization adapts. This change from Microsoft is the most obvious sign that the old model has died and we are in the middle of total transformation.”
Bethesda’s game union offered this comment on Bluesky:
The United Videogames Union chapter of the CWA announced its Game Worker Hardship Fund today to offer financial assistance to U.S. and Canadian workers, including those at Xbox, affected by layoffs. Those eligible include those laid off from January 2024 to now.
The union which represents an estimated 3,000 Xbox workers said you do not need to be a member of UVW-CWA or a union member to apply for this fund.
There is also an itch.io charity bundle being organized by Necrosoft games that will go live later this month. the union said 100% of the funds raised from that bundle will go towards increasing the hardship fund and supporting more game workers.
In a LinkedIn post, game jobs champion Amir Satvat said these layoffs were the worst in gaming history.
“No long words or paragraphs today. This week, and the coming weeks, are about helping people as much as we possibly can,” said Satvat, who provides job resources for those seeking work in the game industry.
“This Wednesday, I am hosting a two-hour session from 9:00 to 11:00 PM ET (free) for anyone who wants to join. I will walk through our 50+ free resources and take questions. You can attend on LinkedIn or Discord and hundreds have signed up already,” he said.
One laid-off employee I interviewed said the severance pay and benefits were somewhat generous, but not as much as in the previous layoff.
That person said they would remain on payroll for about two months, and they would get two weeks of base pay for every six months of service, up to a maximum of 39 weeks of base pay. They also had a standard health insurance extension of three months under COBRA and stock would be allowed to vest during the transition period. There was no mention of a bonus and nothing related to being called back in case a job opened up.
The former Xbox employee said that people started getting deeply worried in the past couple of weeks.
“We had heard the rumor it was going to be between 5% and 10% and now it’s [more than that] and will be the same in another 12 months,” the former employees said. “There were a lot of people who started taking voluntary retirement over the last two weeks.”
On Bluesky, Katherine Souza of ZeniMax Online Studios said that her team lost about half of its employees (noting that this is a reference to her own personal team and not all of Elder Scrolls Online) today.
On LinkedIn, ZeniMax Online web operations engineer William Novak posted, “Unfortunately I’ve been impacted by the Xbox layoffs at Zenimax Online Studios today, along with many others. Having spent 9 years working with the most brilliant people on something that brought genuine happiness to millions, I stand very proud of what we all accomplished. To those also affected today: If you need to chat, please reach out.”
You can also see posts from laid off Xbox employees including Kevin Flynn, Emily Hanson, Mitch Rohrer, Jeremy Devilbiss, Jeffrey Persek, Seth Hawkins, Daniel Alpert, Emily Hampshire, Devin Edgerton, Chris Munson, Tyler McCombs, and Wenzheng Huang. As you can imagine, that list is growing.