Microsoft Xbox Announces Major Layoffs in Gaming Division Amid Strategic Restructuring
On July 2025, Microsoft confirmed significant layoffs across its Xbox gaming division as part of a broader organizational restructuring aimed at streamlining operations and focusing on cloud gaming and first-party content development. The announcement was made official through an internal memo from Xbox head Phil Spencer, who has led the division for over a decade.
The layoffs affected approximately 650 employees worldwide, spanning various teams including game development, publishing, and support functions. Microsoft cited the need to adapt to evolving market conditions and to prioritize investments in Xbox Cloud Gaming and key franchises such as Avowed and South of Midnight.
Phil Spencer emphasized in his memo that the company remains committed to delivering high-quality gaming experiences and supporting its community, stating, “We are listening and we hear you,” addressing concerns from fans and staff alike. The restructuring aims to position Xbox for long-term growth in a competitive industry landscape.
This move follows a series of strategic shifts within Microsoft’s gaming division, reflecting the company’s focus on integrating cloud technology and expanding its Game Pass subscription service. Official sources confirm that while layoffs are difficult, they are necessary to align resources with future priorities.
Image credit: Microsoft Xbox official communications
