This is an Xbox layoff

Last month, my partner and I took a trip to the Oregon coast for a weekend of long walks on the beach. To keep us entertained on the drive, we listened to Blood, Sweat, and Pixels by Jason Schreier, an excellent book about game development framed as case studies of several major games. This was a reread (relisten?) for us, with our first read back in 2022. Naturally, it led us to discuss the changes in the gaming industry over the last four years.

In the summer of 2022, gaming felt like an unstoppable business. The Covid-19 pandemic had boosted engagement and revenue beyond expectations. Gaming was the largest entertainment industry, surpassing film, tv and music combined. In January that year, Microsoft had announced its intention to acquire Activision Blizzard King, (the owner of Call of Duty, World of Warcraft, and Candy Crush) for $68.7 billion, the company’s largest acquisition to date.

I was in my third year at Xbox working on platform and services. We were partnering closely with Azure to build solutions for game developers and publishers. We had a complex, multi-year roadmap to evolve the platform. While it was always clear Xbox was no Azure, Office or Windows, it did feel like the organization was growing faster than ever before.

That period of growth was short-lived. By autumn, a reorg blew up that roadmap due to “market uncertainty”. People and budgets were reassigned to the most valuable projects to account for rising interest rates and cloud capacity constraints. Our work largely pivoted to focus on efficiency and cost reduction.

In February 2023, I experienced my first round of Xbox layoffs. It was the first time I internalized how quickly my job could change from stable to at risk, even at a company as large and successful as Microsoft. Other major tech companies like Amazon and Meta were having layoffs, too. Xbox leadership communicated the rationale with care and respect. I hoped more than believed the layoffs and subsequent hiring freeze were not a signal of deeper problems.

I survived three more rounds of layoffs at Xbox, averaging one major layoff per year. Each round was accompanied by a reorg and adjustment of business priorities (grow Game Pass; no wait, grow PC players; actually, build a mobile store; also handhelds! Are you writing all this down?). How could anyone be expected to do their best work with this much change and uncertainty? At first, I stayed because I enjoyed my work and team. After that third round in July 2025, I left Xbox to pursue a new opportunity elsewhere within the company.

In the summer of 2026, gaming is an uncertain business. There are more games being published than ever before, but rising costs and competition are eating into revenues and profits. Demand for AI is driving up the cost of hardware components right as companies are developing next-generation consoles. Many games in development have been cancelled; a few launched only to be shut down weeks later. Free and lower-cost entertainment like TikTok and Netflix are also taking away more user attention from games every year.

Xbox itself has gone through a complete leadership and strategy overhaul. New CEO Asha Sharma has promised a lot of change in her first 100 days. Her XBOX Reset memo describes a renewed focus on the Xbox console platform and biggest game franchises. Unfortunately, that reset also includes layoffs: 1600 roles were already impacted on July 6, and thousands more are planned in the upcoming year. There have been so many gaming layoffs over the last four years that they have their own dedicated Wikipedia page. Many people thought Sharma could lead Xbox into a comeback, but so far her strategy isn’t that much different from her predecessors.

Schreier’s Blood, Sweat, and Pixels was originally published in September 2017, and yet many of the problems detailed in the book – crunch culture, financial challenges, career and project instability – are still widespread today. I don’t know what the solutions to all these problems are; maybe this is just how the industry operates. I just hope that the talent and grit of the artists, designers, producers, and programmers will persevere to create new games and experiences.