Microsoft Corp. is initiating a significant reorganization of its Xbox gaming division, resulting in the elimination of 3,200 jobs. This workforce reduction represents approximately 20% of the division's total staff and is expected to be carried out over the next year.
Strategic Divestment
As part of this massive overhaul, Xbox plans to divest four of its video-game development studios. Additionally, the company has begun the process of parting ways with a fifth studio. This move signals a sharp pivot in Microsoft's gaming strategy, moving away from the aggressive acquisition phase seen in previous years.
Financial Necessity
In a memo addressed to staff, Xbox Chief Executive Officer Asha Sharma described the current state of the business as "not healthy." Sharma highlighted that Xbox is currently operating at profit margins three to 10 times lower than those of comparable businesses in the industry. "We must reset Xbox," Sharma wrote, emphasizing the urgency of the reorganization to spur growth in the struggling division.
