Microsoft layoffs hit Xbox division hard; 10% of Candy Crush team cut, multiple games cancelled

Microsoft has begun a sweeping round of job cuts within its gaming division, affecting hundreds of employees across its global operations, Bloomberg reported.While an Xbox spokesperson declined to provide an exact number, the redundancies are said to be “widespread and significant,” according to sources familiar with the matter.

The layoffs span multiple studios and regions. King, the Stockholm-based mobile game developer known forCandy Crush, is reportedly letting go of 10 per cent of its workforce, approximately 200 staff. Other European teams, including ZeniMax, have also initiated job reductions.

Several high-profile subsidiaries of Microsoft Gaming, such as Raven Software, Sledgehammer Games, Halo developer 343 Industries, and Turn 10 Studios, known forForza Motorsport, have all been affected.

Multiple long-term projects have been scrapped as a result. UK-based Rare Studio’s fantasy titleEverwild, which had been in development for years, has been cancelled. ZeniMax Online Studios’ original online game has also been shelved. Both studios will see staff reductions following the cancellations.

Notably, the report highlighted that Xbox has further axed its planned reboot of Perfect Dark and closed The Initiative, the studio co-developing the game. In a memo to staff, Xbox Game Studios head Matt Booty cited the decisions as part of a “broader effort to adjust priorities and focus resources” for success in an evolving industry.

The redundancies form part of Microsoft’s latest wave of job cuts, which will see 9,000 roles eliminated companywide, its second major round this year. In May, the tech giant cut 6,000 roles, largely in product and engineering departments. The current cuts will span multiple teams, regions, and levels of seniority, with an emphasis on streamlining processes and removing layers of management.

Phil Spencer, CEO of Microsoft Gaming, acknowledged the difficult decisions in an internal email, stating the company must prioritise its strongest opportunities to ensure long-term growth, added the report. While no specific figures were provided, Spencer assured affected employees they would receive “priority review” for other roles within Microsoft.

Despite the setbacks, Spencer maintained that the company’s roadmap across platforms, hardware, and games “has never looked stronger.”

Employees within the gaming division had anticipated further restructuring since May, when speculation grew that Xbox could face deeper cuts. This marks the fourth significant round of layoffs within Xbox in the past 18 months. The division, which employed around 20,000 people as of January, has faced increasing pressure to deliver higher margins following Microsoft’s $69 billion acquisition of Activision Blizzard in late 2023.

(With inputs from Bloomberg)