This week saw a significant impact on the gaming industry as Microsoft announced layoffs affecting approximately 9,000 employees, marking one of their largest reductions to date. Not every employee affected was part of the Xbox or gaming divisions, but the repercussions in these areas have been substantial.
As a passionate gamer and follower of the industry, I was taken aback by the unexpected closure of major studios, the cancellation of anticipated games, and the unceremonious departure of veteran developers. This turn of events left both players and game creators stunned, and it didn’t take long before dissenting voices within the industry began to be heard.
In recent times, foreign-associated companies have been increasingly focused on achieving short-term profits from extensive investments. Often, they shift their strategies to align with shareholders’ demands, even before sufficient time has elapsed. We believe this event is an outcome of such a business structure.
The term “Restructure” is often associated with forward-looking meanings such as rebuilding or optimization, but it can be somewhat vague in its usage overseas. However, in Japan, the meaning of “Restructure” is more straightforwardly understood to mean layoffs, and its impact is more strongly recognized.
— 野口ショーン (@SeptillionGames) July 4, 2025
Noguchi highlighted a rising issue within the sector, where an excessive emphasis on financial gain overshadows concern for people. In Japan, he noted, the term “restructuring” doesn’t diminish the impact. It still means downsizing, and the negative effects on team spirit and innovation remain just as profound.
He stated, “The game industry thrives on the dedicated developers and staff who put their heart into its creation. As a fellow worker in this field, I feel a profound sorrow over this choice. The remorse that something nurtured for so long won’t reach global audiences, and the harsh truth that eager gamers will miss out on ever getting to play it.
Noguchi’s statements resonate with the sentiments of numerous developers. In an interview with Engadget, a developer working on Xbox confided, “I’m really angry that Phil Spencer’s email boasted about this year being the most profitable for Xbox while simultaneously making cuts.” They went on to say, “It’s tough to feel proud about such achievements under these circumstances.
On July 2nd, widespread layoffs affected numerous employees, with a total of 830 individuals in Microsoft’s Washington state base being impacted. Teams associated with Xbox, such as Rare, Turn 10 Studios, ZeniMax Online, and even Blizzard, experienced significant reductions. Some studios, like The Initiative and Arkane Austin, were closed down. Projects like Everwild from Rare and the revival of Perfect Dark were terminated. Matt Firor, long-time president of ZeniMax, departed after 18 years. Blizzard announced the cancellation of Warcraft Rumble. The consequences of these changes are widespread.
Although Microsoft has not provided an exact number regarding layoffs at Xbox, they have stated that it was less than half. However, as Xbox represents just a fraction of the overall company, this fact may seem insignificant to those who lost their jobs or had their projects discontinued.
Microsoft is increasingly emphasizing artificial intelligence (AI) in its operations. In a speech at Meta’s Llamacon event held in April, CEO Satya Nadella shared that approximately one-third of Microsoft’s code is now being generated by AI. Moreover, Activision has acknowledged integrating AI into their latest release, “Black Ops 6”. Within the company, developers are finding tools such as Copilot indispensable. An unidentified developer further commented that Microsoft is making a concerted effort to automate jobs using AI agents wherever possible.
For individuals who devoted numerous years to game development only to find their creations potentially unrealized, this future fueled by AI seems like a deception. To some, it’s a swap of creativity for ease or even the sacrifice of human values for financial gain.
Microsoft’s earnings continue to be robust, generating $25.8 billion in the opening quarter of 2025, boosted by an 8% increase in Xbox content and services. However, these figures don’t encompass the actual expenses – the abandoned projects, the shattered teams, and the aspirations that will never materialize.
In the midst of ongoing layoffs within the gaming sector, figures such as Noguchi serve as poignant reminders that each choice made impacts real individuals with their own tales and thwarted aspirations.
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2025-07-06 13:49