Microsoft cuts 4800 jobs including many at Xbox

Microsoft is laying off 4,800 people, about 2.1 percent of its global workforce, including many workers at its Xbox video game business.

The layoffs include 1,600 Xbox employees, the company said on Monday, with more to come this year in a broader restructuring designed to “reset” Xbox as it faces increased competition.

“Our business today is not healthy,” said a memo from Xbox CEO Asha Sharma, who took over the gaming division earlier this year.

“We operate at margins 3-10 times lower than comparable platform and publishing companies.”

The industry, where Xbox competes with Sony’s PlayStation and Nintendo’s Switch, is facing a serious “hardware crisis” as costs of console components are soaring, Sharma said.

Beyond the layoffs announced Monday, Xbox expects another 1,600 layoffs during the fiscal year that started last week, Sharma said.

The company is also spinning off four video game development studios previously acquired by Microsoft.

Nearly three years ago, Microsoft signed a US$69 billion ($100 billion) deal to acquire gaming giant Activision Blizzard, maker of Call of Duty and other blockbuster franchises.

The company stated at the time that it wanted to expand its game development portfolio and offer a Netflix-like streaming subscription service, but the strategy did not seem sufficient to get ahead of the competition.

“Although these businesses created meaningful value, they did not grow at the pace we expected,” said Sharma.

The Xbox cuts are in addition to broader Microsoft layoffs that Amy Coleman, the software giant’s chief people officer, attributed to unspecified changes in customer needs.

“I also want to make it clear that the roles that are being eliminated today will not be replaced by AI,” Coleman wrote in a blog post. he wrote.

The layoffs follow voluntary buyouts that Microsoft began offering to about 8,750 people in May.

More than 30 percent of eligible workers accepted these voluntary retirement offers, Coleman said.