Massive layoffs, an internal call for a “reboot” – what’s happening at Xbox right now?
There is a sense of crisis behind the scenes in Microsoft’s gaming division. According to a report by renowned Bloomberg journalist Jason Schreier, the company plans to do so after the end of the fiscal year on June 30 another massive wave of layoffs. It would be the first under new Xbox CEO Asha Sharma. Almost at the same time, an internal memo was sent from management to employees, announcing a brutal “Xbox reset” for the next 100 days and confirming the extent of the problems (source: Bloomberg).
Xbox is losing sales
The realities outlined in the memo paint a bleak picture. Annual sales have increased over the last five years – despite investments of over 20 billion US dollars dropped by almost half a billion.
“This cannot continue like this,” says the internal email. The message is clear: the current course is unsustainable and requires drastic measures, which will likely include significant cuts to the marketing budget (Source: XboxWire).
Microsoft reacts harshly to Xbox crisis
However, the financial difficulties are only part of the problematic situation in which the Xbox brand finds itself. Of course, the hardware component crisis is also cited in the memo. The prices for console memory have increased more than fivefold in just two years, which is slowing down production.
At the same time, the leadership admits that own studio system “overextended” to have. Although many studios were bought, the key, industry-leading brands were not sufficiently financed to survive in the competition.
The consequences of this internal admission are likely to be the layoffs feared by insiders, which will once again mean that Microsoft’s employees will have to pay for the bad decisions of their superiors.
The new leadership around Asha Sharma faces the enormous task of turning things around. Sharma recently stated that there needs to be a rethink when it comes to new hardware, but how exactly the cart will be pulled out of the mess remains unanswered.