Game On: Xbox commences massive job cuts, cancels games

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: This week’s most notable release is Activision’s (MSFT) “Tony Hawk’s Pro Skater 3+4,” a remake of the third and fourth games in the popular skateboarding series. The game launches for Nintendo Switch (NTDOY), Switch 2, PlayStation 4 (SONY), PS5, PC, Xbox One, and Xbox Series X/S. As Activision is owned by Microsoft, the game will be available day one on Game Pass. Meanwhile, Electronic Arts’ (EA) latest college football sim “EA Sports College Football 2026” rolls out July 10 for PlayStation 5 and Xbox Series.

XBOX LAYOFFS: Last Wednesday, multiple media sources confirmed that Microsoft was laying off roughly 9,000 employees, or just under 4% of its global workforce, across different teams, geographies, and levels of experience, amid massive investments in artificial intelligence as well as years of major M&A deals, including the $68.7B acquisition of Activision Blizzard, which closed in October 2023. A significant portion of Microsoft Gaming staff, particularly at many of its studios, were affected by the layoffs, the fourth mass round of layoffs at the Xbox business in the last 18 months.

While the exact number of job losses at the unit is not yet known, Microsoft Gaming CEO Phil Spencer sent a memo to staff last week addressing the moves, saying such losses were necessary in an effort to allow for the “enduring success” of Xbox, according to GameSpot. “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,” he said. The cuts appear to impact both large and small studios at Xbox, with even “Call of Duty” support studios Raven Software, Sledgehammer Games, and High Moon laying off staff and “Candy Crush” maker King reducing its workforce by about 10%.

The stark job losses also have resulted in a number of game cancellations and studio closures. Rare, the studio behind “Sea of Thieves” and “Banjo-Kazooie” cancelled its game “Everwild,” whil longtime veterans at the studio Gregg Mayles and Louise O’Connor will be departing Microsoft, according to Bloomberg’s Jason Schreier. Meanwhile, a new massively multiplayer online RPG from Zenimax Online Studios, which develops “The Elder Scrolls Online,” has been axed, as has the long-troubled “Perfect Dark” reboot, Schreier said. The Initiative, the studio established in-house at Xbox to develop “Perfect Dark,” has been shuttered. Additionally, Schreier reported that Microsoft has cut nearly 50% of its staff at “Forza Motorsport” developer Turn 10, which made every single “Forza Motorsport” game since the first title in the series was released in 2005.

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