Microsoft Lays Off 4,800 Employees, Including Senior Xbox Leaders

Microsoft began a significant workforce reduction yesterday, announcing the immediate layoff of 4,800 employees worldwide. The cuts are heavily concentrated within the Xbox division, with 1,600 positions being eliminated on Wednesday. Additional reductions are slated for Xbox operations throughout the fiscal year.

In an internal memo, Xbox CEO Asha Sharma stated that the company's strategic bets on the Game Pass subscription service, multi-platform strategies, and a broader content portfolio did not achieve anticipated growth. Sharma also announced structural changes within Xbox. Corporate Vice President of Product Services, Dave McCarthy, is leaving his role after eight years. Helen Chiang, Corporate Vice President of the Minecraft franchise, will move into a newly created Chief Operating Officer position, overseeing P&L for content, hardware, platform, and services.

The company has seen other leadership departures prior to these layoffs. In June, Craig Duncan, head of Xbox Game Studios, stepped down. Louise O’Connor, Xbox’s chief of staff, also departed. These layoffs, described by Microsoft as the most substantial restructuring in Xbox history, affect employees with decades of service.

Among those departing is Kevin LaChapelle, a 37-year Microsoft veteran. LaChapelle was instrumental in developing backward compatibility for Xbox consoles and later led the team behind Xbox Cloud Gaming. He expressed his belief that all entertainment will eventually be streamed and wished the team success.

While industry observers were aware of Xbox's challenges, the scale and timing of these cuts, along with studio closures, took many by surprise. Unionized developers at Bethesda Game Studios, a subsidiary of Microsoft-owned ZeniMax Media, reported that numerous programmers, artists, designers, and testers, many with long tenures, were impacted.