Microsoft has announced significant layoffs across its gaming divisions today, cutting jobs at major studios and cancelling upcoming games as Xbox lead Phil Spencer responds in a new memo.
Layoffs have dominated the gaming world for a number of years now despite the industry showing growth across the board, and Xbox (alongside Microsoft at large) has been one of the most affected areas when it comes to job losses.
Despite several significant studio acquisitions - including a $68,700,000,000 buyout of Activision Blizzard - Microsoft has undergone several rounds of layoffs in key studios over the past year alone, and announcements today reveal what could be one of the more significant cuts.
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Alongside layoffs, Microsoft has also announced that a number of upcoming games - both those already revealed and some that were previously unannounced - have been canceled.
Which studios been hit by Microsoft layoffs?
As reported by GamesIndustry.biz, roughly 4% of all Microsoft employees have been affected by the current round of layoffs, which amounts to around 9,000 employees in total across several studios and departments.
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This exceeds layoffs that were made just under two months ago in May, as around 3% of total staff were left jobless then, and it now tallies as the fourth round of job cuts in the last 18 months for Microsoft's gaming division.
What we know so far is that the King mobile gaming division and ZeniMax Europe have been the studios most affected by today's layoffs, with around 200 people cut from the former studio.
However, more staff are expected to be informed across US offices later today, and certain staff at studios like Rare have already revealed that they are looking for work on social media.
What games have been cancelled by Microsoft?
As of the time of writing, two games have been confirmed to be cancelled as a consequence today's cuts at Microsoft. First is Everwild from legendary studio Rare, who most recently developed the hit multiplayer pirate game Sea of Thieves.
This new IP was first announced all the way back in 2019, and updates on the game's progress were rare following a 2020 trailer, with reports from VGC indicating that development had been ongoing for over a decade and had been recently rebooted.
Additionally, as per Bloomberg's Jason Schreier, an unannounced new MMORPG project code-named 'Blackbird' from Zenimax Online Studios has also been cancelled.
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Made by the developers behind the Elder Scrolls Online, this new title had reportedly been in development since 2018, but has now been scrapped as part of the cuts.
How has Phil Spencer responded?
Xbox boss Phil Spencer responded to the layoffs in a new memo to staff across the gaming division, as shared by IGN, highlighting the reasons why Microsoft decided to go ahead with further job cuts and cancellations.
"Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft's lead in removing layers of management to increase agility and effectiveness," Spencer explained.
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"I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously.
"We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on expectations the company has for our business."
This comes only shortly after the reveal of a new long-awaited handheld Xbox device that is scheduled to release later this year, alongside a new long-term partnership with AMD for future Xbox home consoles.