Xbox workers stunned after jobs 'bloodbath'

Microsoft has laid off approximately 1,900 workers across its Xbox division in what employees are describing as a "bloodbath" that has eliminated entire teams and raised fundamental questions about the company's commitment to the gaming business it spent $69 billion to acquire Activision Blizzard for just two years ago.

The layoffs, which were communicated to affected staff in a series of early-morning emails, affect every part of the Xbox organisation, from game development studios to marketing, quality assurance and community management. Several recently acquired studios, including some that were part of the Activision Blizzard purchase, have been closed entirely.

The scale of the cuts has stunned the industry. Microsoft's gaming division employs approximately 22,000 people, meaning the layoffs represent nearly 9 percent of the workforce. The company has described the cuts as part of a broader restructuring designed to eliminate duplication and focus resources on priority projects, but employees say the process has been chaotic, with teams that were told they were safe being eliminated days later.

The layoffs raise questions about Microsoft's strategy for Xbox at a time when the console market is stagnating and the company has been shifting its focus towards subscription services and cloud gaming. Game Pass, the subscription service that Microsoft has positioned as the centrepiece of its gaming strategy, has seen slowing growth, and the company's cloud gaming service remains a niche product.

Microsoft's gaming chief, Phil Spencer, told remaining staff that the cuts were "painful but necessary" and that the division remained a priority for the company. But the scale of the layoffs, coming so soon after the Activision acquisition, has undermined confidence in that message among both employees and the wider industry.