Microsoft Conducts Layoffs Third Year in a Row, Including Game Development Teams

For the third consecutive year, Microsoft has announced layoffs across multiple divisions, including its video game segment.

According to a report by Business Insider, these cuts, described by sources as “small,” also affect the company’s security and sales teams. However, the exact scale of the layoffs remains unclear.

In a statement to Business Insider, Microsoft confirmed that some “underperforming” employees would be let go. The move comes after two years of significant workforce reductions within Microsoft’s gaming division.

In January 2024, Microsoft laid off 1,900 employees during the closure of Arkane Austin and Tango Gameworks, which led the Communications Workers of America (CWA) to call for increased unionization among game developers. The union had previously praised Microsoft for its openness to union formation but condemned the company’s approach to workforce reductions, calling the layoffs “lacking respect and compassion.” “These layoffs further highlight the volatility within the gaming industry, even for major players like Microsoft,” a CWA spokesperson stated at the time.

In January 2023, the company cut 10,000 employees, affecting prominent Xbox teams such as The Coalition, 343 Industries, and Bethesda Game Studios. That wave of cuts was part of a broader restructuring following Microsoft’s $68.7 billion acquisition of Activision Blizzard. Xbox head Phil Spencer justified the cuts in 2023, saying they were necessary to align leadership on “growth opportunities.” However, critics, including former employees of 343 Industries, accused Microsoft of mismanaging its studios, pointing to the troubled development of Halo Infinite as an example.