Microsoft cuts nearly 5,000 employees, Xbox at the forefront
Microsoft has just announced a significant cut in its workforce, laying off about 4,800 employees. This represents 2.1% of its global workforce. The impact is strongest in the Xbox division and commercial sales. The news comes amid growing fears that artificial intelligence is replacing jobs. However, according to Amy Coleman, EVP and head of personnel, artificial intelligence is not replacing these specific positions. What it is doing is transforming the way work is done.
The cuts in Xbox are particularly notable, with 1,600 employees losing their jobs. Xbox CEO Asha Sharma described this restructuring as the most significant in the division's history. According to Sharma, Xbox's financial health is not at its best, operating with margins well below other platforms and publishing businesses. Strategies like Game Pass and the expansion of the content portfolio have not achieved the expected growth. To make matters worse, the industry is facing an unprecedented hardware crisis.
Xbox needs to reinvent itself
The Xbox restructuring involves drastic changes. Four game studios will be transferred to new management, with Compulsion Games and Double Fine Productions becoming independent again. Ninja Theory and Undead Labs will receive new investments to continue and expand their most popular games. Additionally, management will be streamlined, reducing management layers from 14 to a maximum of five. Helen Chiang has been appointed COO, with full authority over profits and losses in content, hardware, platform, and services.
The strategy now is to focus on strategic pillars, such as Mojang and King, responsible for hits like Minecraft and Candy Crush. The gaming industry is shrinking, but the opportunities generated by artificial intelligence are growing. Companies like Google DeepMind and Runway are receiving millions in investments to develop playable world models, seeing games as a short-term commercialization opportunity.
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