A rhetoric of growth and efficiency amid restructuring, cancellations, and massive profits
Microsoft kicked off its 2026 fiscal year with a new round of layoffs affecting multiple areas of the company, including its Xbox and Sales divisions, according to CNBC. This news comes off the heels of additional layoffs the company performed in May.
This has led to the cancellation of multiple different projects, including some highly anticipated games. According to Gamespot, newly acquired studio The Initiative has been closed, meaning that the Perfect Dark reboot the studio was working on has been cancelled. A gameplay trailer was released last year during an Xbox Games Showcase that signaled positive development.
On top of this, other studios were not safe from the recent decisions. Zenimax Online Studios and Rare, two prolific studios under the Microsoft umbrella, were affected. This led to the cancellation of Everwild, a game that has been in development for ten years, and a new MMORPG, given the codename Blackbird.
The layoffs have explained by statements by higher-ups in the company to fuel growth and efficiency. Amy Hood, Microsoft’s chief financial officer, said in an April earnings call that “we (Microsoft) continue to focus on building high-performing teams and increasing our agility by reducing layers with fewer managers.”
However, there are fears that the layoffs could be coming because of AI-integration, with CEO Satya Nadella saying earlier this year at Meta’s Llamacon that “20, 30 percent of code” for projects is written by software.
Xbox CEO Phil Spencer said that the cuts would allow for “enduring success and allow us to focus on strategic growth areas.” The enduring success mentioned likely refers to Microsoft’s record high earnings that it has reported recently, claiming revenue was $70.1 million for their third quarter.
Microsoft’s focus on cloud gaming and AI projects reflects growing trends in the gaming industry, but with the recent closures and cancellations, it remains to be seen how their aspirations will manifest.
CNBC Article: https://www.cnbc.com/2025/07/02/microsoft-laying-off-about-9000-employees-in-latest-round-of-cuts.html
