Bloomberg reported on the 10th, citing multiple people familiar with the matter, that Microsoft's (MS) Xbox game division plans to carry out a large-scale restructuring in July. The move is seen as a response to poor results.
According to sources, Xbox is considering major layoffs after June 30, when MS's fiscal year ends. The exact size is unknown, but the industry expects around 1,000 people. It also plans to significantly cut budgets for some business units, including the marketing institutional sector. If this round of layoffs materializes, Xbox will have carried out large-scale layoffs for four consecutive years.
Chief Executive Officer (CEO) Asha Sharma launched a reorganization to boost Xbox's profitability immediately after taking office in February. At a recent event, Sharma said Xbox's business is "not in a healthy state," and noted the company plans to "reset" the business from the ground up over the next 100 days.
According to MS, Xbox invested more than $20 billion (about 31 trillion won) over the past five years in content, platforms, and hardware, but annual sales instead fell by nearly $500 million (about 680 billion won). On MS's internal profitability metric, profitability also fell to around 3%. In a recent email to employees, CEO Sharma stressed, "This situation can no longer continue."
Xbox has posted weak results for years due to sluggish console sales, stalled growth in subscription services, and a lack of hits. Under pressure from parent company MS to improve profitability, Xbox over the past two years has wound down game studios, halted development of new titles, and raised product prices.
Sharma said the company must rebuild its platform infrastructure over the coming months and conduct a full review of its game portfolio. Sharma assessed that while the organization expanded to increase content supply, it became overly bloated as it simultaneously pursued strategic shifts in a market awash with content.
Xbox plans to strengthen its lineup of exclusive games to bolster its console share. Sharma said that for Xbox's revival, "it is important to reliably supply exclusive games and new intellectual property (IP)." Until now, Xbox has released most of its own games on rival platforms PlayStation and Nintendo as well.
However, some analysts say that abandoning a strategy of releasing exclusive games has also weakened the incentive to buy Xbox consoles. According to the industry, more than 90 million units of the PlayStation 5 have been sold to date, while Xbox console sales are estimated at only 30 million, about one-third as many. In response, Xbox said in a recent video introducing new titles that it will not release "Gears of War: E-Day" and "Clockwork Revolution" on PlayStation or Nintendo Switch.