Xbox has a fundamental problem… it’s leaders
You may have heard that Microsoft once again laid off thousands of staff, this is in addition to the 1,900 staff they laid off last January, the studio closures in May 2024, the 1,000 jobs lost in June 2024 and the 650 from September 2024. If you thought this was the first round of layoffs in 2025, I have 6000 job cuts to show you from May 2025 and another 305 people to tell you about from June, and now they have added at least 9,000 staff to that number.
First, to everyone who has been let go, we send the best wishes we can and hope that you land on your feet sooner and with an employer who cares for you.
Now, for this most recent round of layoffs, who has been impacted? Well, there are some confirmed and a lot of rumours, so let us begin with those confirmed.
Confirmed:
Studio Closures:
The Initiative – Founded in 2018 was working on Perfect Dark
People:
Matt Firor - ZeniMax Online Studios president
Mike Mongeau - Head of Xbox family and child safety
Game Cancellations:
Perfect Dark – was being made by The Initiative
Everwild – In official development since 2014
“Blackbird” – New MMO game being developed by ZeniMax Online Studios
Unannounced Projects
Rumoured:
People:
Gregg Mayles – Everwild game director and Rare veteran
Louise O’Connor – Executive Producer at Rare
Studios:
King – Approx 10% off of its workforce has been let go
ZeniMax Online Studios – Unconfirmed number of staff have been locked out of internally used systems, likely connected to Blackbird
Turn 10 Studios – Approx 50% of its workforce has been let go
Raven Software – Unknown number of staff impacted
Sledgehammer Games - Unknown number of staff impacted
Halo Studios - Unknown number of staff impacted
Undead Labs - Unknown number of staff impacted
The line up of studios is looking bad
So, with all that outlined, what happens next? Honestly, for those impacted by the layoffs they will spend a few days or weeks just adjusting to being treated like shit. I know this as I have been let go from a job before, but they will in time pick themselves back up and push on with doing what they love.
Where things become more complicated is with Microsoft, specifically the Xbox leadership team. The trio of leaders at Xbox are Phil Spencer, Matt Booty and Sarah Bond, with the three of them taking control over different aspects. So, from those three where does the buck stop, well it’s with Phil Spencer and that is also where many of the problems the Xbox brand has began. According to Spencer’s own LinkedIn profile, he has been in charge of Xbox since March 2014, so more than 10 years now. So, that means that every decision, either good or bad, since then is a result of his choices.
While the Xbox One’s original launch was not something Spencer was responsible for, he was involved with it on the games side of things. Once that ‘always online’ mantra was scrapped, Xbox could have tried to salvage things, but it appears Spencer had other plans. When he took over Xbox in March 2014, the Xbox One had been on the market for just a few months and then in November 2014, the company stated that they would no longer release sales numbers for their Xbox hardware, a decision that Spencer himself made. Now at the time, it sparked a lot of speculation that the Xbox One was not selling and while in July 2023, almost 10 years after the console launched, it was confirmed that they had sold 53 million Xbox One consoles, there was never a breakdown of how many of each or when.
From 2023 but the first time we saw numbers for the new machines
The decision not to produce sales numbers for public viewing was the first big change for Spencer, it then followed in 2016 with the redesigned Xbox One S console and the Xbox One X a year later. The next major hardware release for Spencer was the Xbox Series X and Xbox Series S consoles, which launched in November 2020 and while a number of gamers were done with Xbox after they fumbled the Xbox One launch, the lower price Series S console seemed to have helped bring some folks back.
In between the hardware launches, Spencer championed a small program called Game Pass, which offered a library of games for a small monthly or yearly fee. At first this program was only for Xbox consoles, but it would soon get a PC version and then one that offered both. In September 2020, just before the launch of the newest Xbox hardware, xCloud launched into beta, though you will know it by another name today, Xbox Cloud Gaming. This is where the wheels fell off Xbox as a business, because you no longer needed to own an Xbox console or even a Windows PC to play their games, if you had a supported web browser, then you could play. Eventually that program evolved into supporting TV’s, Amazon’s Fire Sticks, Steam Deck and Meta Quest VR headsets. This has been explained in detail via the “This is an Xbox” campaign.
Now while Spencer was working on the above, he was also doing other things like championing backwards compatibility, allowing original Xbox games to be playable on the latest hardware. He also pushed companies to support cross-platform multiplayer and while you might argue that was due to the small number of Xbox consoles sold, it is also something that made sense. But all this changed in 2014 when Spencer championed the buy of Mojang, the makers of Minecraft. In the following 5 years Xbox, via Spencer, bought up studios like Ninja Theory, Playground Games, Obsidian Entertainment and Double Fine Productions. It was the buy of ZeniMax Media in 2020 that shook the industry, because that group was a massive third-party developer and now, they were owned by Xbox.
The final big buy from Spencer was that of Activision-Blizzard-King, the home of Call of Duty, World of Warcraft, Candy Crush, among countless others. One of the big deals around this was the Xbox would own Call of Duty, which was a powerhouse title and sold incredibly well on PlayStation, but a deal was reached that confirmed the series would not be made Xbox exclusive. That confirmation was good news for many but then lead to Xbox stating that some of their first party games would no longer be exclusive to Xbox and since then Sea of Thieves, Grounded and more have released on platforms made by other companies.
So, that is what Xbox has done over the past decade under Spencer, so why is that a problem, well there are two reasons. The first is that Xbox as a brand was built around the console hardware and Game Pass nuked that from existence. There are people who will champion Game Pass and those who will advocate against it in all forms, but for good or bad it is not going anywhere anytime soon. This is in part to Microsoft CEO Satya Nadella and his ‘bring the mountain to mohammed’ mentality. I know the saying is the other way around, but Nadella’s thinking is if people won’t come to Windows for things like Office, then they take Office to them and now that same thinking applies to Xbox. If people are not buying Xbox consoles, bring the Xbox games to them via their TV or phones.
The second issue is Spencer for the longest time and his reports Matt Booty and Sarah Bond, were all about letting developers cook. Now there is both good and bad to this, the good is of course letting developers create the games they want. The bad however is letting people create things without oversight, which is how you get games like Everwild, which had reportedly reset development twice, since it started back in 2014. The Initiative was much the same, when it was founded, we heard nothing for years and then we started to hear that it was a mess inside the studio, people were leaving on mass and then they had to sign a deal with Crystal Dynamics to help work on the game.
While Spencer was so focused on making Xbox an idea rather than hardware, he didn’t check in on developers to see what they were doing. We saw this with Redfall, the game launched in such a broken mess, that it killed off any good will players may have had and the lack of interest in the game lead to the studios closure. After the launch Spencer was on the Kinda Funny Games YouTube channel and said this:
“I'll just say all up, there's nothing that’s more difficult for me than disappointing the Xbox community”
Which is all well and good, but as the head of the disappointment, he does not get to be sad a game he approved did not release in a good state. In that same statement, he made a comment about letting developers do the things they want to do, but when you have someone like Harvey Smith, you let them do what they know. Smith was the creative director on the Dishonored series of games, so why anyone at Bethesda or Xbox thought making him responsible for an online-co-op shooter made sense, needs their head examined. For the past four years, we have taken guesses at what studios might be doing and we have them for Xbox as well, for 2025, 2024, 2023 and 2022 and you know what has changed in that time, barely anything.
Since November 2020, Xbox Game Studios have developed 13 games, just 13 original games in 4.5 years. They have published other games from studios not their own like Ara: History Untold and remade all the Age of Empires games, but brand new works, those are slim. The issue comes down to Spencer not willing to be a boss at times, as an example Playground Games, in November 2021 they released Forza Horizon 5, an incredible game and worth playing on Xbox or now PlayStation 5. But while the studio was working on that, reports from 2018 said they were doing Fable and here we are 7 years later and we have not seen gameplay. How about Undead Labs, the studio made one game when Xbox bought them, they then released State of Decay 2 and in 2020 announced the third game in that series, but since then it has been dead. Or how about a studio that is releasing a game in just a few short weeks, The Coalition. The studios first work was a remake of Gears of War for Xbox One, then a year later they did Gears of War 4 and then 3 years later Gears 5. That brings us to 2019 and since then, nothing, well ok not nothing but everything else was created by other studios with them overseeing things. Gears Tactics was created by Splash Damage, Gears Pop! was Mediatonic, now know for Fall Guys. So, in the past 6 years since Gears 5, what has the studio been working on, how about another remake of Gears of War, the same game they first created as a studio.
This is what I mean when I say Spencer does not want to be the boss, if this was Electronic Arts, PlayStation or Take-Two Interactive, The Coalition would have been closed years ago. I love the Gears of War series, but it is not a big seller and for a studio to spend 6 years remaking a game, for the second time, should lead to questions about what the fuck they are doing. I know the studio has Gears of War: E-Day coming, but that is 2026 if not later and they did work on the Matrix Unreal Engine 5 tech demo, but a tech demo is not a game. Spencer spends all his time telling folks that he is a gamer, that he loves to play games, but he has no idea what the hell people want. Case in point, Spencer laid off thousands of people and then went home to play Xbox, including a game that was made by countless people he just laid off.
I’m crying Phil Spencer fired people who made Indiana Jones then booted up the game 😭 https://t.co/R59l3xvhp8 pic.twitter.com/DSMQ0vGWqR
— Besk (@BeskInfinity) July 2, 2025
You can read the memo that Spencer sent out to Xbox staff below and it highlights how out of touch Spencer is. In the memo he states this:
“I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger.”
The stones on someone to come out and say that as business we are doing great but then proceeds to lay off people by the thousands, it is just crazy. Even worse, he thanks people for making Xbox what it is today and then throws them out the door. If this was the first time something like this had happened at Xbox, you could argue in favour of it, but this is the sixth time in just a few years and strangely, it all happened after they spent $69b USD to buy something they did not need to buy.
Phil Spencer might be a gamer, but as a manager he is horrible and the people that report to him are no better. They keep promising games, but either take years to deliver or just outright fail to deliver them, they promise hardware and then push cloud gaming. But the most egregious thing, they keep laying people off by the thousand and no-one at Microsoft is asking, maybe the leaders are the problem. The sad part is, even if Phil leaves today, he will likely get a multi-million dollar thank you package.
Xbox need to do better and right now, the captain of that ship is steering right towards an iceberg, and we all know how that goes.
“Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, 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. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.
I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.
Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.
HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.
Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.”
