Xbox ‘reset’ as Microsoft cuts 4,800 jobs | Money News

Microsoft has revealed 4,800 job losses globally, with the bulk of the pain to be felt at its struggling Xbox gaming unit where a fifth of its workforce is facing the axe.

Commercial and engineering teams would be the other areas of the group affected by the cuts, Microsoft said, the latest to hit employees amid huge investments in AI infrastructure to grow the business.

Microsoft has also paid out vast sums to bolster its own productivity and bottom line but it denied any suggestion the roles would be the latest to be replaced by AI.

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Amy Coleman, the company’s chief people officer, told staff in a blog post: “We are working on alternative solutions to job eliminations, and beyond this, we will continue to invest in equipping employees with new skills, including in AI.

“For those who are impacted, we provide financial support and resources to help them take their next step.”

She added: “I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”

The 4,800 figure equates to 2.1% of the company’s workforce.

Xbox was cutting 3,200 people, with half of those affected due to leave on Monday.

Its chief executive, Asha Sharma, told staff in an email: “Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.”

“We must reset Xbox”, she added.

She had used an earlier blog post to set the stage for her plans.

They include new ownership for two of its gaming studios, including Cambridge-based Ninja Theory in the UK which Microsoft bought in 2018.

Two others have been returned to management ownership.

Xbox has been struggling in the face of a consumer switch from consoles towards online gaming experiences, weak subscription numbers and a surge in memory chip prices that forced it to raise console costs.

“Excluding Activision Blizzard King, over the past five years we have spent over $20bn on ongoing investments in our content, platform and hardware subsidy”, Ms Sharma previously explained, “but our annual revenue has declined nearly half a billion during that time”.

At a group level, Microsoft’s share performance has lagged rivals this year and it is currently 20% down in the year to date.

Its cash flows have been squeezed by the mounting investment demands of AI, such as in new data centres, that enable growth at its Azure cloud-computing business.