Microsoft has announced plans to eliminate approximately 9,000 jobs worldwide, representing about 4 per cent of its global workforce, as the technology giant continues cost-cutting measures whilst investing heavily in artificial intelligence infrastructure.
The cuts have hit the company’s gaming division particularly hard, with hundreds of employees laid off across Xbox subsidiaries. Microsoft’s Stockholm-based King division, which makes Candy Crush, is cutting 10 per cent of its staff, or about 200 jobs. Other European offices, including ZeniMax, have also begun reducing their workforce.
Several high-profile gaming projects have been cancelled as part of the restructuring. The fantasy game Everwild, in development at UK-based Rare Studio, has been axed, alongside an original online game from ZeniMax Online Studios. Xbox has also cancelled the planned Perfect Dark reboot and shuttered The Initiative, one of the studios behind the project.
“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,” said Phil Spencer, Microsoft Gaming chief executive officer, in an email to staff.
The gaming division cuts affect studios including Call of Duty developers Raven Software and Sledgehammer Games, as well as Halo Studios and Forza Motorsport developer Turn 10 Studios. Turn 10 is reportedly laying off more than 70 employees.
In his memo to Xbox employees, Spencer acknowledged the timing of the cuts: “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.”
This marks the fourth mass layoff at Xbox in the past 18 months. The gaming division has been under pressure to boost profit margins since Microsoft’s $69 billion acquisition of Activision Blizzard, which closed in October 2023.
The latest cuts follow earlier rounds of job losses in 2025, including 6,000 positions eliminated in May and an additional 305 reductions in June. Microsoft has also conducted performance-based cuts that have reportedly affected employee morale.
Xbox game studios head Matt Booty told staff that the studio closures and project cancellations “reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape.”
The gaming division had approximately 20,000 employees as of January 2024. Affected employees will receive severance benefits and will be given priority consideration for open positions elsewhere within Microsoft, according to company statements.
