Microsoft slashes workforce, as scores of game-makers and major games are cut

An extraordinary news day also saw the conviction of three former top Ubisoft leaders for workplace harassment, though they are unlikely to serve jail time. (Plus: Freedom for Kotaku.)

Everwild. Screenshot: Microsoft, Rare

Microsoft cut its workforce by 4% today, some nine thousand jobs across multiple divisions, including its gaming teams.

In its gaming division, the cuts included:

• Cancellation of two announced games, Everwild (from Rare, announced in 2019) and first-person shooter Perfect Dark (from The Initiative and external partner Crystal Dynamics, announced in 2020)

• Closure of Santa Monica-based Perfect Dark studio The Initiative. (In an email to staff, Microsoft’s head of video game studios, Matt Booty, said the game cancellations and studio closure “reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape.“)

• Cancellation of “several” (Booty’s word) unannounced projects, including, reportedly, a massively multiplayer game at Zenimax Online Studios.

• Layoffs across myriad studios, including King (Candy Crush), Turn 10 (Forza) and Undead Labs (State of Decay)

• Regarding the scale of the cuts Microsoft would only share that they were less than half of the company’s overall layoffs.

In an email to staff, Microsoft gaming chief Phil Spencer noted a contrast between the cuts and the supposed current success of the Xbox gaming group.

He wrote:

To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.

And in the next paragraph:

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously.

So why any cuts? Spencer wrote:

We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

All of that is, of course, executive-speak that offers little transparency about the finances of Microsoft’s gaming team.

The games group has recently reported much slower revenue growth than some of Microsoft’s other teams, including those tied to AI, even as the overall company has been surging.

For the first three months of this year, Microsoft reported net income of $25.8 billion, an 18% increase from the same period a year ago.

That’s off of a 13% year-on-year increase in revenue, to $70.1 billion.

Seems great, right? Microsoft’s been raking in tons of money and turning a huge profit? Maybe that kind of profit even raises some questions about the need to cleave off 4% of the workforce?

But, keeping the Game File focus on the gaming division, the telling stats are $270 million and 5%