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On today’s episode of “Daily Variety” podcast, Variety’s Jennifer Maas details Microsoft’s massive overhaul of its Xbox unit with 3,200 layoffs and a realignment of operations coming under newly appointed Xbox CEO Asha
Sharma.
Maas explains that Microsoft’s moves are designed to be extremely transparent and extremely frank about the state of Xbox within the tech giant. In February, Microsoft shocked the gaming community by making a big shift in leadership of gaming with Asha Sharma replacing Phil Spencer as CEO. Sharma issued a memo to company staffers outlining the company’s challenges and the plan for an initial round of 1,600 layoffs, which may be followed by as many as 1,250 more down the road.
In the memo, “Asha said point blank, ‘Our business today is not healthy.’ And that’s a big deal for a CEO to admit,” Maas says. “We are very clear right now that Xbox is not in a good position and that it hasn’t been for some time. One thing we learned that they’re in some areas of the business have 14 layers of leadership. They want to try and get that down to three or five.”
The pruning also includes a plan to sell off four game studios that were acquired by Microsoft in the past decade: Ninja Theory, Undead Labs, Compulsion Games and Double Fine Productions.
The feeling within Microsoft is that the company had “too many studios and there’s too many games in the works. I think many weren’t getting the attention they deserved, and they’ve also pointed to the fact that many weren’t making the money that Xbox needed to see in order to justify those studios being part of the larger business,” Maas says. “They made it clear that they found homes for [each studio] or found a way to return them to the founders, rather than closing studios.”
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