Microsoft has announced it is cutting 4,800 jobs — roughly 2.1% of its workforce — in a sweeping restructure aimed at focusing on areas that can deliver for customers in a "fast-changing industry."

The Xbox Shake-Up

The gaming division bears the heaviest impact. Xbox's new CEO, Asha Sharma, announced the company is undertaking "the most significant restructure in Xbox history," with more than 1,600 roles immediately axed and another 1,600 to be lost over the coming year.

Four major game development studios are being spun off as independent companies: Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs. These studios will depart with their intellectual property, marking a significant shift from Microsoft's previous acquisition strategy.

"These changes are about a bigger future for Xbox, not a smaller one," Sharma stated in her memo to staff, adding: "History is full of companies that mistake longevity for inevitability. We will not be one of them."

The Strategic Shift

Executive Vice President Amy Coleman framed the cuts as a necessary response to industry change. "Companies don't get to choose whether their industry changes; they only get to choose whether they change with it," she said.

Notably, Coleman clarified that the company would not replace lost roles with AI, though she acknowledged that "AI is changing how work gets done."

Under the new structure, Minecraft developer Mojang and Candy Crush developer King will report directly to Xbox's CEO, signaling Microsoft's focus on its biggest intellectual properties and audiences.

According to analyst Piers Harding-Rolls of Ampere Analysis, this reflects Xbox's strategy shift away from the acquisition-heavy approach used to build Game Pass offerings. "The company has now decided that some of these teams and the games they are building would be better suited to sit outside the Xbox organisation," he noted.

The Silver Lining

While the cuts are substantial, the decision to spin off rather than close the studios has been welcomed by the affected teams. Double Fine Productions expressed gratitude for "seven great years together" at Microsoft, while Compulsion Games emphasized its confidence in its independent future.

**Source: BBC News