Microsoft has recently announced another series of layoffs within its gaming division, as revealed in an internal memo from Phil Spencer, the CEO of Microsoft Gaming. This follows significant layoffs that transpired throughout 2024 and into the first half of 2025.
According to a report by Bloomberg, these layoffs primarily impacted teams in Bethesda and King, the developer behind Candy Crush. Approximately four percent of Microsoft’s workforce, totaling around 9,100 employees from a total of 228,000, have been affected.
Phil Spencer’s memo outlined the changes:
“Today, we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and focus on strategic growth areas, we will end or reduce work in certain parts of the business. Following Microsoft’s example, we will also streamline management layers to enhance agility and effectiveness. Specific details regarding today’s notifications and organizational shifts will be communicated 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 are more robust than ever. The success we’re experiencing now stems from difficult decisions we made in the past. We must make strategic choices for sustained future success, focusing on the best opportunities. Our approach is to protect thriving areas while concentrating on where we see the most potential, ensuring we deliver outstanding games and experiences for players for generations to come.”
“While prioritizing these opportunities is necessary, it does not diminish the impact of this moment. We owe our current success to the creativity, talent, and hard work of those affected. Our momentum is not by chance; it reflects years of dedicated effort from our teams.”
“HR is actively working with impacted employees to provide severance benefits in line with local laws, including pay, health coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions within Microsoft Gaming, where their applications will receive priority review.”
“Thank you to everyone who has shaped our culture, products, and community. We will proceed with deep respect and gratitude for all who have contributed to this journey.”
— Phil
Microsoft has faced several rounds of layoffs over the past two years, including 1,900 employees in January 2024, 650 in September 2024, and over 6,000 from May to June 2025. These reductions follow the closure of several ZeniMax teams, including Arkane Austin, the studio behind Redfall, and Tango Gameworks, known for Hi-Fi Rush.
What are the implications of these layoffs on Microsoft’s gaming strategy? The recent staffing cuts reflect a need to streamline operations and focus on the company’s most promising ventures within the vast gaming landscape.
Is Microsoft’s gaming division facing long-term stability issues? Despite current layoffs, the wide player base and game variety indicate potential for growth, provided that the company channels resources into strategic opportunities.
How does Microsoft support affected employees? HR has put a robust severance support plan in place, offering essential benefits and job placement resources to help employees transition smoothly.
What does the future hold for Microsoft Gaming? With a strong lineup of games and insights gained from ongoing market analysis, the company is positioning itself to retain leadership in the gaming industry amidst this restructuring.
In conclusion, while the layoff news is disheartening, the strategic focus reveals Microsoft’s commitment to long-term growth in the gaming sector. Explore more about Microsoft Gaming’s plans and how it impacts the industry at Moyens I/O.