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XBOX lays off 1,600 - Resetting XBOX

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ivandagiant

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https://news.xbox.com/en-us/2026/07/06/resetting-xbox/

1,600 layoffs today, with another 1,600 to happen by the end of FY27.
4 studios leaving XBOX: Ninja Theory and Undead Labs are being sold, Double Fine and Compulsion going independent and will keep their IP.|
Mojang and King will directly report to Sharma now.

Plan to reduce management layers to 5, or even 3 where possible. Current XBOX has up to 14 layers of management in some cases.

"We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested."

I recommend reading the article, it is pretty to the point and isn't full of all that patronizing corpo speak.
 
bigddybn said:
I hope they are successful, not just as an XBOX owner but as a consumer. The more valid choices there are in the marketplace, the better. Sony is doing a fantastic job lately of showing why there needs to be a valid alternative.
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Agreed. Sony has always felt a bit behind Xbox in terms of screwing over the consumer to me. They adopted monthly payments to play online a generation after Xbox did. They made fun of Xbox for trying to lock down used games, just for them to go digital only for the PS6. They are going to go all out if they don't have Xbox competing with them. Nintendo and Sony occupy different ends of the spectrum for gaming that I think they would be content as a duopoly and not step on each other's toes. Would be really bad.

Article also says that they are shifting investment to focus on high priority projects. "These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. " Maybe we will finally see the Elder Scrolls VI by 2030? Nearly fucking 20 years for the game, that is so sad. And I have little hope in Bethesda now too.
 
Brutal but arguably necessary. The original Xbox and Xbox 360 succeeded in part because the teams were focused and could move with speed. The entire platform bogged down as Microsoftness creeped in. Not just more management layers, but the company's bad habit of making divisions serve outside goals (the Xbox One in particular represnted Ballmer's dream of forcing Windows 8, Kinect, and Media Center into the living room).

The real challenge is building back up. How does Microsoft make compelling hardware and draw developers in after losing trust through two consecutive generations? If it were me, I'd treat the Xbox division as a scrappy upstart and make clear that this is not your parents' console — that the spark is back and there's a reason to get one over the PS6.
 
It's reached the finding out phase of the old saying f... around find out.

Of course clearing out all the box ticking middle managers, useless larpers and political activists hired over the last 15 years is only part of the solution. Without follow through in fostering real talent and a laser focus on targeting their games at the real customers, and not the imaginary customers, the ship will continue to flounder. Maybe now World of Warcraft can move away from feeling like World of My Little Pony.
 
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We know what the sustainable formula is. You need like 20 free spirit hippies that truly come up with off the wall great ideas, and then you need 1 real dick head boss that keeps everything on track and grounded in reality and 1 middle manager to act as a liaison to keep the other 2 from every directly interacting.
 
westrock2000 said:
We know what the sustainable formula is. You need like 20 free spirit hippies that truly come up with off the wall great ideas, and then you need 1 real dick head boss that keeps everything on track and grounded in reality and 1 middle manager to act as a liaison to keep the other 2 from every directly interacting.
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This is the model for success pretty much any place I've ever worked. A room full of super geeks, a money/politics guy, and a translator between them.
 
I guess MS ran into issues with France's labour laws in trying to clean house at Arkane. Maybe we'll still get to see Blade, maybe we won't. But then maybe the game sucks which is why they're getting cut.
 
ivandagiant said:
Plan to reduce management layers to 5, or even 3 where possible. Current XBOX has up to 14 layers of management in some cases.
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Well that's a good start. Unfortunate for those 3200 getting laid off. Something had to change though, and cutting those management layers and focusing on accountability seems a good direction.
As corpo posts goes, this one does seem to hit some of the glaring pain points, so not bad?

Sad to see Undead Labs go, I enjoyed State of Decay games, but it had long iteration time for AA content and several reports of the studio being a bit of a mess, so I can see the rationale.
 
1_rick said:
I don't see how Microsoft ever gets rid of this sclerotic encrustation of excessive layers of management, but things won't get better until they do. It's just crazy.
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Who is the current Xbox Boss ?


Screenshot_20260706-122831_Bing.jpg
 
1_rick said:
I don't see how Microsoft ever gets rid of this sclerotic encrustation of excessive layers of management, but things won't get better until they do. It's just crazy.
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It happens far too often. There's some really odd ducks in the MBA world with some pretty hair-brained ideas. A guy we had at the company I work for was convinced you could only have so many people reporting to you and that if you had more than that number you had to appoint more managers to manage those people. Granted, he didn't care how many people the shop floor managers had reporting to them, only the office staff. But, this is how you get to 14 layers of management by artificially splitting up teams into sub-teams and grouping them up into other units until you get where they are now ... a bloated mess.
 
big thing in tech was to turn your best software-engineer people into manager, there was prestige (so they wanted to have a team and had dream project they wanted to be in charge of, the idea that good software maker could make good head of project they were passionate about) and made the giant salary look more reasonable and if you acquire studio and let it independant you do not have control on it, + you add a microsoft layer of management over all of it.

Destroying studio independance to enforce flatness and make the microsoft layer over it as small as possible, accept to pay a fortune for people that manage zero people and so on, can be made, but that not always easy.
 
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The overall gaming industry was concerned when Microsoft of all entities started buying up studios largely without any actual plan around it. Microsoft does this with every entity it touches from Skype to Nokia Microsoft buying something means that it will be stripped, sold for parts, or just jettisoned for little reason.
 
kac77 said:
The overall gaming industry was concerned when Microsoft of all entities started buying up studios largely without any actual plan around it. Microsoft does this with every entity it touches from Skype to Nokia Microsoft buying something means that it will be stripped, sold for parts, or just jettisoned for little reason.
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that sound a bit unfair to the multi trillion Microsoft that was built a lot via acquisition.

Linked, github, minecraft, powerpoint went well enough, there probably as many success story than horror one, you cannot do that well for 40 years like they did otherwise.

Skype backend became the backbone of Teams which was a giant success, with the many free smarthphone to smarthphone video call alternative (android-iphone that come with them or WhatsApp, google voice and what not if you need to call a regular phone), moneytising skype became really hard, with Skype being an extremelly costly way to do it on phone network, well it was working well on regular computer.

With so much of the gaming money going into the forever games, MIcrosoft acquisition or not a lot of those failing studio would have still fail.
 
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westrock2000 said:
We know what the sustainable formula is. You need like 20 free spirit hippies that truly come up with off the wall great ideas, and then you need 1 real dick head boss that keeps everything on track and grounded in reality and 1 middle manager to act as a liaison to keep the other 2 from every directly interacting.
Click to expand...
This is why Apple succeeded early on, and again once Jobs came back. Wozniak was the hippie who could make engineering leaps (like consolidating multiple functions into one chip) and otherwise pursue pipe dreams; Jobs knew how to sell the concept and otherwise treat Apple as a business. They both needed an actual CEO (Michael Scott) to curb their impulses, but you get the idea.

The first Xbox was the product of relative outliers like Seamus Blackley who wanted to make a console and refused to play by Microsoft's usual rules (there was some pressure to make it a WinCE "appliance"). They got special leave to make the best product they could, and opened up a market that was shrinking. I'm not counting on a repeat, but I'd like to think Sharma will find people like Blackley (if she hasn't already) and rally them.
 
Aurelius said:
This is why Apple succeeded early on, and again once Jobs came back. Wozniak was the hippie who could make engineering leaps (like consolidating multiple functions into one chip) and otherwise pursue pipe dreams; Jobs knew how to sell the concept and otherwise treat Apple as a business. They both needed an actual CEO (Michael Scott) to curb their impulses, but you get the idea.

The first Xbox was the product of relative outliers like Seamus Blackley who wanted to make a console and refused to play by Microsoft's usual rules (there was some pressure to make it a WinCE "appliance"). They got special leave to make the best product they could, and opened up a market that was shrinking. I'm not counting on a repeat, but I'd like to think Sharma will find people like Blackley (if she hasn't already) and rally them.
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Jobs had focus, signal to noise ratio, get 3 things most important done no matter what each day, filter out all the excess noise. And charisma that gets everybody around aligned, engineers saying it will take 6 months to accomplish, Job's "You can do that in two weeks", after two weeks the engineers accomplish what they thought they could not.

Microsoft, multiple conflicting management levels, each coming up with separate goals, changing goals meshing, lack of focus creating endless noise and incomplete cycles of actions. Microsoft has a very bad habit of buying and destroying exactly why they bought something for in the first place, when one group inside of Microsoft see's value then a higher more powerful manager decides to just kill the project.
 
socK said:
Well, looks like a good chunk of id software was wiped out, among others.

https://www.gamespot.com/articles/x...zenimax-as-focus-shifts-to-bigger-franchises/
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I wonder if that investment into AI by Microsoft, expecting AI to compensate and improve overall studios results, predicting which ones that can be most profitable. Basically, Microsoft to Studio, you have AI now, you don't need so many employees. I can't stop thinking this is part of the reasoning behind this.
 
Ugh, Elder Scrolls Online studio ZeniMax Online, lost half their staff right as the game had been turning itself around the past year :(.
 
It just seems insane to have some of the best IPs but they just sit on them. Or even have games that could still use a remaster or rerelease.

Not sure if it would be Microsoft but I would love to see a remaster or digital releases of Freelancer and MechWarrior 3/4 to name a few.
 
WarriorX said:
It just seems insane to have some of the best IPs but they just sit on them. Or even have games that could still use a remaster or rerelease.

Not sure if it would be Microsoft but I would love to see a remaster or digital releases of Freelancer and MechWarrior 3/4 to name a few.
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The amount of IP they gained with the activision buyout is huge.

Think of how cheap it would be to pump out a new police quest etc keeping the same format. A small team with a good writer could pump out a new game every year.
 
Microsoft has like 14 layers of management to reach the average worker.

Let's see those clowns fired first before the hard working 9 to 5 guys and gals.
 
Zorachus said:
Microsoft has like 14 layers of management to reach the average worker.

Let's see those clowns fired first before the hard working 9 to 5 guys and gals.
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Too late for that, the ID people were among the most talented in the industry. It's pretty obvious the ship is sinking, maybe even for all of Microsoft I don't really know.
 
thedream829 said:
Whoever named the Xbox's all those stupid name should be jailed.
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It started with the Xbox 360. The PlayStation 2 was out a year before the Xbox ... and when the PlayStation 3 was going to be released, Microsoft didn't want to name the new Xbox "Xbox 2" because they didn't want it to sound inferior. And so "360" was born ... and all the stupid names that followed.
 
Shoganai said:
It started with the Xbox 360. The PlayStation 2 was out a year before the Xbox ... and when the PlayStation 3 was going to be released, Microsoft didn't want to name the new Xbox "Xbox 2" because they didn't want it to sound inferior. And so "360" was born ... and all the stupid names that followed.
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Should of called it the Xbox 3, and then Xbox 4 and so forth.
 
ivandagiant said:
https://news.xbox.com/en-us/2026/07/06/resetting-xbox/

1,600 layoffs today, with another 1,600 to happen by the end of FY27.
4 studios leaving XBOX: Ninja Theory and Undead Labs are being sold, Double Fine and Compulsion going independent and will keep their IP.|
Mojang and King will directly report to Sharma now.

Plan to reduce management layers to 5, or even 3 where possible. Current XBOX has up to 14 layers of management in some cases.

...
Click to expand...

I would not be surprised if, after that whole operation, they ended up with *fifteen* management layers.

Microsoft can out-bureaucrat the best.
 
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