The reality of the massive restructuring at Microsoft, which has been discussed since June, has finally come to light, sending shockwaves through the industry. Of the 4,800 roles affected by this restructuring, approximately 3,200 are within the Xbox division.

According to the announcement, this restructuring began in early July. Half of the affected staff—1,600 individuals—were laid off immediately on the day of the announcement, while the remaining personnel are scheduled to go through the resignation process sequentially until next year. Along with this, the company has significantly reduced the existing complex management tiers to simplify the organizational structure.

This restructuring, referred to as a 'Great Purge' across the industry, largely reflects the lackluster performance despite multi-billion dollar acquisitions of large game companies. It also incorporates Microsoft's shift in direction toward expanding its AI business. Microsoft CEO Satya Nadella has previously stated, "We have invested in gaming for the past 25 years, yet we have failed to generate profit, and we must transition this into a sustainable business."

A prime example cited is the cumulative number of Xbox Game Pass subscribers. Contrary to the 75 million target projected by management, the actual number of subscribers stalled at the 30 million mark, less than half of the goal. Furthermore, it was confirmed that these studios are being divested due to reasons such as the poor performance of new titles from the acquired developers.

 

With this measure, five Xbox-affiliated studios are being released. Double Fine, the developer of Psychonauts, and Compulsion Games, the developer of We Happy Few, will return to independent studio status under their original management on the condition of receiving initial operating capital. Compulsion Games will also be separated in a way that allows it to retain the rights to its own games.

Ninja Theory, the creator of Hellblade, and Undead Labs, which was developing State of Decay, have been sold to external investment funds and buyers, losing their exclusive status. In the case of Arkane Studios located in Lyon, France, the development of Marvel Blade has been temporarily suspended, and labor-management negotiations regarding a sale or spin-off are underway in accordance with French labor laws.

Core studios remaining within Xbox also faced staff reductions. It was reported that Bethesda is facing large-scale layoffs and a total ban on new project development, with multiple foreign media outlets reporting that the studio will now focus only on five major IPs, including Fallout and The Elder Scrolls. Obsidian Entertainment, which recently faced a class-action lawsuit for labor law violations, is also reported to have laid off 60 to 70 people, or 25% of its total workforce, due to the poor performance of Avowed and The Outer Worlds 2.

Meanwhile, both Sony and Microsoft, companies that significantly influence the game industry, have conducted restructuring this year due to poor performance following large-scale developer acquisitions. As a result, the atmosphere among developers in the industry is rapidly turning negative. There is talk that a representative precedent regarding the risks of capital-dependent developer acquisitions has been re-established. Along with concerns about talent drain in the industry, there are various worries emerging, such as market saturation due to mass unemployment of developers and job instability.