Microsoft is reportedly preparing for substantial layoffs within its gaming division, with potential job cuts expected as early as next week. According to Bloomberg, the Xbox division will be significantly impacted by these planned reductions. The Verge corroborates this, noting that managers have already been briefed on the upcoming Xbox-related layoffs, which are part of broader company-wide cuts—particularly affecting sales teams.

For the gaming sector, sources suggest Microsoft intends to streamline operations ahead of the release of its next-generation consoles. Just last week, Microsoft announced a strategic partnership with AMD to power future Xbox hardware, including first-party consoles. However, no official launch timeline has been revealed yet.

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Additionally, The Verge reported that Microsoft is restructuring its Xbox distribution in Central Europe and will stop operating in certain regions.

Employees who spoke to IGN anonymously due to concerns over career repercussions shared that there’s a growing sense of inevitability about the layoffs at Microsoft—expressing that it's not a matter of if, but when.

The trend of cutbacks in Microsoft’s gaming business has been ongoing since the acquisition of Activision Blizzard for $69 billion. In January 2024, 1,900 staff members were laid off. Not long after, studios like Arkane Austin (developers of Redfall) and Tango Gameworks (Hi-Fi Rush) were shuttered. Then in September 2024, an additional 650 gaming employees were let go. Most notably, May of this year saw a staggering 6,000 employees—representing 3% of Microsoft’s global workforce—laid off.

In June 2024, Xbox CEO Phil Spencer addressed the situation during a conversation with IGN, stating: “I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make.”