Although stock markets widely expected Microsoft (MSFT) to announce a job cut, the gaming sector did not anticipate such a deep cut for Xbox.
Microsoft said that it would cut 4,800 jobs, which amounts to over 2% of its global workforce. The gaming division gets the biggest cut as a percentage of total cuts at a unit. It will lose 1,600, or 20% of its workforce. The firm reasoned that Xbox lost 64 cents for every dollar it invested.
This round of cuts might not be the last one. Unfortunately, Xbox’s parent company is so focused on keeping up with capital expenditures for its AI Chatbot, Copilot. It is fearful that heavy spending by Meta Platforms (META) and Alphabet (GOOG) would leave Microsoft’s AI behind.
Xbox’s business downturn did not happen recently. Years of neglect for the gaming studios it acquired added to the cumulative losses. By the time it bought Activision for $68.7 billion, the unit recorded too big a loss over the last 10 years. The good news is that Double Fine and Compulsion Games will become independent. Furthermore, Microsoft will sell Ninja Theory and Undead Labs.
The divestiture might give those studios a chance to continue working on the unreleased games. After many years of delays, gamers might have a chance to buy them. In an era where Xbox, PlayStation, and PC gaming hardware prices are soaring, the industry needs such game titles on the market.
