Xbox is reportedly considering major layoffs, telling staff, “we need to reassess […] our investment priorities for the next five years” and warning “we’ve become too reliant on vendors to operate our systems and must become more self-reliant as an engineering culture to build for the future.”
Bloomberg reports that new CEO Asha Sharma is considering the cuts as the company fights to stem declining revenue. Though not yet confirmed, Bloomberg sources suggest the cuts will likely come as Microsoft ties up its fiscal year at the end of this month.
It is not known how many people will be impacted, but it is thought that Xbox is planning to “significantly slash budgets for marketing and some other areas of the business.”
Xbox declined to comment.
The news comes as Sharma marks her first 100 days as CEO, telling staff and players that “it is important to have both optimism and realism as we work to reset the business.”
In a blog post, the CEO marked five specific priorities: the fight for attention, its 3 per cent accountability margin (down YoY), the hardware component crisis, the tension of expanding studios when it needs “a pipeline of content to meet multiple strategies,” and the “current platform infrastructure.”
“Our systems are overly complex, spanning hundreds of dependencies, which hinders our ability to move fast,” Sharma and Matt Booty wrote in a joint message sent to staff and later added to the Xbox News Wire.
“We’ve become too reliant on vendors to operate our systems and must become more self-reliant as an engineering culture to build for the future. We must increase the value we ship to players while decreasing the time it takes to do so. Going forward, we’ll evolve and rebuild our stack and look at capabilities across all of Xbox and potential M&A to help us win in hardware, PC, mobile, and streaming.”
The statement continued: “For some of you, these realities will be surprising and even frustrating to discover. We won’t succeed by hiding hard truths, nor will we succeed by doing the same thing and expecting different results. Like the ‘everyday wins’ mentality from the first 100 days, we will sprint to make progress against hardware, content, experience, and services together.”
The statement – signed by both Sharma and Matt Booty – closed on calling for a “reset for a stronger Xbox.”
Earlier today, we reported that Sharma said the industry should prioritize reducing hardware production costs rather than focusing solely on developing the “most premium, high-performance consoles”. It comes after a 33% year-on-year decline in hardware revenue during Q3, which Sharma described as “not particularly healthy.”
To address this, Xbox is reintroducing exclusive titles to the platform, including the recently announced Gears of War: E-Day and Clockwork Revolution as platform exclusives, and lowering the price of its flagship subscription service, Game Pass, which Sharma noted had already “started to see a return to growth, more subscribers and, more importantly, better retention.”
