Update [Wed 2nd Jul 2025, 3:10pm]:

According to VGC, sources tell the outlet that UK studio Rare has been affected by the layoffs, and as a result, the long-in-development Everwild has been cancelled. While this title wasn’t announced for PS5, there would have been a good chance of a port had the game made it to market.

Original Story: The significant layoffs affecting the Xbox division — first reported earlier this week — have now begun, says Bloomberg journalist Jason Schreier.

In a fresh article, Schreier claims that King, the developer behind Candy Crush, is losing 10% of staff, which equates to roughly 200 jobs. Meanwhile, some employees at Zenimax have also been informed they are being laid off. Zenimax is the company that Starfield, Fallout, and The Elder Scrolls developer Bethesda is a part of.

Xbox employees based in the USA are expected to learn of job cuts later today.

Layoffs are affecting the entirety of Microsoft today, with as many as 9,100 people across the whole company cut, according to The Seattle Times.

Via Windows Central, an internal email sent to employees has been made public. Penned by Xbox lead Phil Spencer, he told staff: “Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”

Spencer states he recognises these layoffs come at a time when Xbox has “more players, games, and gaming hours than ever before”, but choices must be made for continued success:

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

He then thanks those who are losing their job as a result of today’s layoffs:

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

Following the decision to port Xbox titles over to PS5 and Nintendo Switch, the hardware manufacturer is more of a third-party games company than ever before. As such, the potential studio closures can affect future PS5 titles. As this is a developing story, there will unfortunately be updates throughout the day of more people losing their jobs and even possible studio closures.