Microsoft plans another round of layoffs in its Xbox gaming division next week, as part of a broader company-wide reorganization.

This will mark the fourth major job cut in the Xbox unit over the past 18 months.

It follows three rounds of layoffs last year and the closure of several subsidiaries.

The layoffs are aimed at improving profit margins after Microsoft’s US$69 billion acquisition of Activision Blizzard in 2023.

The company usually makes organizational changes near the end of its fiscal year on June 30.

Microsoft declined to comment on the upcoming cuts, but Bloomberg reported that thousands of jobs, especially in sales, may be affected by the restructuring.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Microsoft’s post-acquisition layoff cycle continues a historical pattern

Microsoft’s Xbox layoffs follow a consistent historical pattern of workforce reductions after major acquisitions.

After acquiring Nokia in 2014, Microsoft announced its then-largest layoff in company history, cutting 18,000 jobs (14% of its workforce), with 12,500 directly from Nokia’s division to eliminate role duplications 1.

The current Xbox cuts represent the fourth major layoff in 18 months following the $69 billion Activision Blizzard acquisition in 2023, aligning with Microsoft’s established approach to post-merger integration 2.

These restructurings typically occur near Microsoft’s fiscal year end (June 30), as seen in both the 2014 Nokia-related cuts and the current planned reductions 1.

2️⃣ Activision acquisition drives revenue but masks underlying Xbox challenges

Microsoft’s gaming division reports impressive topline growth of 43% year-over-year in recent quarters, but this figure obscures fundamental challenges within the Xbox business 3.

Without the Activision Blizzard contribution, Xbox content and services would have actually declined by 4%, revealing dependency on the acquisition rather than organic growth 4.

Recent Microsoft developments