Microsoft prepares for major layoffs in Xbox division

In the context of ongoing challenges faced by Xbox in the gaming industry, reports have surfaced indicating that Microsoft is set to make significant layoffs within its Xbox Gaming Division. This restructuring is expected to take place next week and could be the fourth round of substantial job cuts within this division in the past 18 months. Sources suggest that managers within Xbox have already been briefed about the impending cuts, as the company navigates various strategic changes in its business model. Many industry insiders believe the layoffs are linked to Microsoft’s efforts to adapt to a rapidly changing gaming landscape, where competition has intensified notably across console generations. The Xbox brand has seen considerable transformation, especially in its approach to gaming through subscriptions and hardware. Following a noted decline in hardware sales of the Xbox Series X and S, which reportedly dropped by approximately 30% in recent estimates, Microsoft has begun raising prices on its gaming hardware. Due to various tariffs and economic conditions, the Xbox Series S is now priced higher than a PlayStation 5, and the Series X exceeds the cost of a PlayStation 5 Pro. This pricing strategy has provoked reactions from consumers and competitors alike, especially as Sony has opted to discount its hardware offerings recently. While Microsoft strives to innovate by providing subscription services like Game Pass, growth in subscriptions has plateaued after a significant rise during the pandemic. The sluggish subscriber growth raises questions about the future viability of this model, as industry insiders indicate that considerable numbers of new subscribers may not be forthcoming. Microsoft has openly considered expanding its gaming library to rival platforms, including PlayStation, depicting its current strategy as a deliberate pivot in positioning Xbox not only as a console maker but also as a third-party game developer in the evolving market. As layoffs loom and restructuring occurs, it remains unclear how long such cuts will continue, and what future plans Microsoft intends to implement to stabilize its industry position. The gaming community and industry observers are keenly following developments, as the ongoing organizational changes could significantly affect not just the workforce but the strategic direction of the Xbox Gaming Division as a whole.