MicrosoftMicrosoft has started a new wave of layoffs across its Xbox gaming division, impacting teams in Europe and beyond as the company continues restructuring efforts.
The cuts began on July 2, shortly after the end of Microsoft’s fiscal year. An internal memo from Xbox head Phil Spencer confirmed the decision, stating the company would “end or decrease work in certain areas of the business” as it shifts focus toward long-term goals.
In the memo, Spencer told staff: “We are focused on aligning our strategy, priorities, and resources to best set ourselves up for success in the next era of gaming.” He added that the changes include “reprioritizing certain products and initiatives, and aligning our teams to support our strategic priorities.”
Candy Crush’s King among those affected by layoffs
Roughly 200 employees were laid off at King, the mobile studio behind Candy Crush. According to reports by Bloomberg, the move impacts around 10% of the studio’s European workforce. Cuts were also made across other areas of Xbox’s operations in the region, like ZeniMax.
King GamesThe layoffs signal a significant shift in how Microsoft is choosing to manage its growing portfolio.
Xbox has also canceled several major projects as part of these layoffs, including the long-awaited Perfect Dark reboot.
The game had been in development at The Initiative, a studio Microsoft built from the ground up in 2018 to create high-end, prestige titles. Staffed by veteran developers from Rockstar, Naughty Dog, and Crystal Dynamics, the studio was positioned as a first-party powerhouse. Now, both the project and the studio are being shut down entirely.
Moreover, Turn 10 Studios, the team behind Forza Motorsport, was hit with layoffs affecting nearly half of its staff. This is significant not just because Forza has long been one of Xbox’s most stable and successful franchises, but also because the latest title was a reboot released in late 2023.
Call of Duty support studios were not spared either. High Moon, which helped develop Warzone and Modern Warfare entries, was one of several Activision teams affected.
Phil Spencer emphasized that the company “will continue to invest in areas that will grow our business and support our players and creators,” pointing to a broader strategy centered around operational efficiency and long-term sustainability.
These latest cuts follow previous rounds earlier in the year. In May, Microsoft eliminated more than 6,000 roles across its engineering and development teams. The July layoffs mark another major reduction, with signs suggesting the total number affected will grow, with US offices finding out later today.
Microsoft has not confirmed the total number of roles cut this month. For now, the focus remains on restructuring areas of the Xbox business, including publishing, business support, and regional operations.
Despite the cuts, Spencer maintains that Xbox is not scaling back its ambitions. “We will continue to build great games, create innovative experiences, and reach players wherever they are,” he said in his latest message to employees. “That mission hasn’t changed.”
Microsoft also added a statement regarding the layoffs, explaining: “We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace.”
If more layoffs are announced, we will update this article.
