On the commercial side, she said the cuts would build on Microsoft’s US$2.5 billion ($4.38b) push, announced last week, to embed 6000 engineers with major clients to accelerate AI adoption.
At Xbox, CEO Asha Sharma told employees in a separate memo that 1600 positions were being cut immediately, with the rest to follow through fiscal year 2027.
Xbox has been through successive rounds of cuts since Microsoft’s US$68.7b ($120.47b) acquisition of Activision Blizzard in 2024 after a long review process by regulators over competition concerns.
Sharma described Xbox’s business as “not healthy”, with profit margins “3-10 times lower” than rivals.
She said the division had bet on Game Pass, its Netflix-like subscription service, to drive growth. But the service lost millions of subscribers after a subscription price hike last October, forcing the company to reverse course and slash the fee.
Sharma succeeded longtime Xbox chief Phil Spencer, who retired in February, and has pledged to return the division to growth by 2027.
She wrote: “History is full of companies that mistake longevity for inevitability. We will not be one of them.”
Four studios will leave Xbox as part of the restructuring.
Compulsion Games, known for South of Midnight and Double Fine Productions, maker of Psychonauts, will become independent, retaining their intellectual property and game catalogues.
Ninja Theory, the makers of Hellblade, and Undead Labs, behind State of Decay, have entered terms to join new owners with funding to continue their current projects.
In France, Arkane’s management is beginning a required consultation with its Works Council to review what Sharma called “potential strategic options” – a process that could result in further closures or a sale.
Arkane is currently working on the high-budget Marvel’s Blade game with industry reports saying Microsoft may cancel the project after delays and cost overruns.
Microsoft on June 25 said it will raise the price of its Xbox video game consoles worldwide as a component-cost surge fuelled by AI affects the industry.
Sony and Nintendo have also raised the prices of their game consoles, and Apple announced substantial increases for its Macs and iPads.
– AFP
