The backlash against Xbox’s recent layoffs stems from their large scale and the sense that they were done with precise intent.
While it’s common knowledge that the gaming industry has been hit hard with job cuts over the last two years, the case of Xbox feels particularly ruthless.
Despite earning over $25 billion in profits last quarter, Microsoft cut more than 9,000 jobs across its gaming sector and beyond.
The goal wasn’t survival but trimming the budget, with those who made the games ending up on the losing end.
Which Studios Were The Most Affected By Xbox Layoffs?
Studios like Rare, Turn 10, and Tango Gameworks, as well as high-output teams like Raven Software, didn’t survive the cut.
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+ 3Games like Everwild, Perfect Dark, and even a new MMO from ZeniMax were scrapped completely. Although some fans called these choices necessary evils, blaming mismanagement or failed projects, the truth behind it is more frustrating.
Even high-performing studios like the Hi-Fi Rush team weren’t spared. Microsoft didn’t just trim underperforming teams but also axed creative groups that didn’t meet aggressive profit expectations.
The bigger issue lies in how Xbox leadership, including Phil Spencer, framed the layoffs by publicly praising the workers they had just let go while claiming the platform was stronger than ever and thanking people for their contributions as they were being shown the door.
How Is Microsoft Quietly Profiting from These Layoffs?
One of the more disturbing truths about Microsoft’s recent layoffs is how much money the company quietly saves and even earns in the process.
click to enlarge + 3The company not only slashed wages but also quietly removed millions in potential equity that employees had been counting on as part of their long-term benefits.
At big tech companies like Microsoft, new hires usually receive stock as part of their pay, but they only fully own those shares after working there for several years. The purpose is to encourage loyalty, but if an employee is laid off before their shares vest, the stock simply goes back to the company.
This means every layoff recovers wealth that was promised but never delivered. According to former developers, some of the forfeited stock was worth enough to fund their kids' college tuition. Now scale that across thousands of employees, and you're looking at potentially hundreds of millions of dollars worth of equity quietly reclaimed.
Meanwhile, Microsoft’s stock has climbed to record levels thanks to announcements about layoffs, AI funding, and streamlined operations. The workers build up the product and the brand, then get fired before the payout matures. And that wealth returns to the company just as its stock reaches all-time highs.
Is This Part of a Larger Pattern?
Even worse, this is not an isolated case because Microsoft has had several rounds of layoffs since 2023, including after acquiring ZeniMax and Activision Blizzard.
click to enlarge + 3Despite promises that these acquisitions would expand the Xbox ecosystem and bring more value to players, all they’ve done is centralize power, cut jobs, and hand more money to shareholders. Executive bonuses and dividend payouts have increased while thousands of careers were derailed.
The timing of those dividend bumps, especially following layoffs, has also caught attention. This is the cost of doing business under shareholder pressure. Xbox isn’t laying people off because it must but because its current model benefits from it.
And as many feared, this strategy might be laying the foundation for Xbox to eventually exit the console business altogether. The Series X and S have underperformed, and Microsoft has started positioning Game Pass as a platform that doesn’t need Xbox hardware to survive.
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