It took a while to find the right words to begin this video with, but I think we found them. They are the words of Phil Spencer, and I’m just going to say them straight. We have more players, games, and gaming hours than ever before. Our platform, hardware, and game road map have never looked stronger. Yeah, Phil Spencer said those. He didn’t say them a few months ago. He said them well, pretty much now. That’s how he opened his memo to staff right before he laid off many thousands of those staff. You see, this is Xbox’s fourth round of layoffs in 18 months. Microsoft stock just hit an all-time high one day before these layoffs. And we can see their reporting. And in that reporting, we see the Xbox Division is profitable. So, how can they justify all of these canceled games, all of these closed studios, and all of these layoffs? Well, we’re going to see how they’re trying, but I have a sense that most of you think they can’t. Xbox haven’t been willing to put firm numbers in the impact here, but the total number of layoffs across the whole organization of Microsoft is around 9,000 people. That’s 4% of the whole company. April had a layoff of about 6,000 people. Now, this was mostly within Microsoft’s wider structure and management. This week’s layoffs have seemingly been focused quite heavily on Xbox. Game Filer reporting on Microsoft would only confirm that Xbox’s layoffs were quote less than half of the company’s overall layoffs, which is still really bad because that could still mean up to 4,500 people have lost their jobs or are still in the process of learning if they’re going to lose their jobs because yes, some people don’t know even, you know, days later as this sort of process rolls on. Many people don’t know. I know people who don’t know. Of course, in many instances, people just found out immediately. And that does bring me to how these were delivered. This has been handled abominably. Basically, information was delivered as each time zone started their day, with staff, of course, being scheduled for meetings, and just having access to their tools, being turned off, and even hearing about layoffs via social media leaks faster than from their own teams. And it actually wasn’t until very late in the day that the statement from Xbox Studios head Matt Booty eventually leaked out and seemingly put a cap on the total casualty list. But man, it is a long list. Three announced games have ended their development. Rar’s Everworld has been cancelled. That’s after a decade in development and layoffs are impacting that team. Then 35-year company veterans like Greg Males and Louise O’Connor are planning to leave the company in the wake of that move. Obviously, that’s a project that was going nowhere fast, but they at least if those people thought it was going somewhere, it’s dead probably for them. It’s the right time to just get the hell out. Of course, another game is uh Perfect Dark. It’s been cancelled and the development studio, The Initiative, is being shuttered entirely and uh the staff are being released. Now, Xbox build it right as a quadruplea game. Nice sweet testament to hubris. And the initiative was a studio purpose-built to make such games to make quadruple AAA games. I mean, right? And of course, it was a total show. Perfect Dark underwent significant creative deadlock. There were staff overhauls. It was really the usual AAA uh you know, but I suppose with another A whacked on for good measure. But we still did see this demo. It was um you know, not uh not really a vertical slice of the game. Bits were staged, but obviously that is a thing with demos. But that’s it. It’s dead. And this tweet from Xbox really, really does not age well. This cancellation also has an impact on another group, and that’s co-developer Crystal Dynamics because they’ve obviously just lost a humongous contract. Now, you may remember they’re also now owned by the Embracer Group. And as you know from the news cycle, Embracer are very willing to make deep cuts when they need to. Next, Blizzard Entertainment. Warcraft Rumble is ending content development. And man, that thing was in development for a long ass time. It obviously wasn’t really going anywhere and uh with that and other layoffs, it’s basically hitting up to 100 staff at Blizzard. Though I am a little bit uh wanting to put an asterisk on that, at least from what I’ve been able to observe, there are some functions that would have been Blizzard traditionally that then sort of moved into like a shared pool with Activision. So, it could be that there are many more than just 100 people who work in and around Blizzard stuff that uh would be impacted by a layoff like this. Now, of course, there’s also the topic of games we’re never going to see, but we also didn’t really hear about. That’s because unannounced things have been cancelled. Zenia Online Studios were working on Blackbird. Blackbird was a new MMO. It was in development for nearly 8 years. Now, it’s gone. And with that being canceled, Zenax president Matt Fer has announced that he is leaving the company because obviously look at what happened. Then there’s a new shooter from the Romero. Yeah, as in like John Romero of Doom fame. So they were making that game down in Galway um under Bethesda, but it’s actually had its funding pulled. So this is quite literally a thing where this is an external company, not one owned by Microsoft, who were in development. They had a publishing deal. That deal has now been cancelled and their marrows say that they will not be the only project like this. So we know about these layoffs, but there’s almost certainly going to be many more layoffs from companies who are impacted by the ripple effects of all of these cancellations. Now then, of course, there are wider Xbox losses to contend with as well. Windows Central reporting that the core hardware teams have largely avoided the cuts. But then the Verge is reporting that the quality team at the user research division has been halfed cuz you know quality um optional I suppose. And also the head of family and child safety is also leaving. So that’s uh you know nice cheery stuff. I suppose they can replace that with an AI. It’ll be fine. Then marketing and community support layoffs have been reported on World of Warcraft on Zenax Bethesda stuff. And of course, there’s many more layoffs that will not be reported as full layoffs because they were like with contractors whose work won’t be renewed. And this stuff really does blow. Even an example and say World of Warcraft. One of the things that their social media team did over the last few years is basically work out how to connect with the people like make memes stuff you know on on social content that actually kind of ingratiated themselves to the community. It’s a sort of thing that, you know, only the internal team could actually do. But now we found out it’s all just going to be outsourced, so I’m sure it’ll just be sauceless uh slop. Lovely. But it’s not the end. Developer layoffs hit Undead Labs, the Overwatch team, and King, who have lost 200 people. And then there’s Call of Duty. Even COD wasn’t safe here. So, Highmoon, Sledgehammer, and Raven have all taken hits, which I’ve got to say is absolutely wild because they’ve appeared to be the studios who have been thrown into awful development situations of basically, hey, we need a yearly COD. It’s basically a bit screwed. Uh, please go fix it so we get something that even those teams are being hit on. I mean, COD, like one of the largest like franchises or properties on Earth. Kind of crazy. Next, then Turn 10, who are the creators of Fortza Motorsports. Well, they uh they’re not having a nice time now. They’ve had two decades of specialized experience on racing games and now they’ve been halfed. Yes, halfed. 70 people, half the studio are gone. And to season that wound with some lovely salt and vinegar, well, it’s kind of their fault because Fortza Motorsports turned into a live service. So, I guess there’s no need for sequels. So, I guess, you know, we’ll just throw all of that talent into the bin. Lovely. Um, of course there’s the other Fortza stuff, uh, Horizons, which comes from another studio called Playground. So, you might be wondering, why did all of this have to happen? Especially because, as Phil Spencer said, Xbox is in the best position that it’s been in flipping decades. Revenue, right? Revenue has spiked. Spiked on a quarterly level. It spiked on an annual level uh, in the last few years. Um there’s been regulatory changes that have been so in their favor that basically mean they’ve just unlocked the mobile store that they’ve been trying to build just big for their business. They’ve done this whole shift, you know, that we’ve all seen to them being a third party publisher. They’re basically selling probably more games on PlayStation than Xbox. Now the Switch stuff has also gone well. They’ve got constant bestsellers for old ports. They are publishing games on a near monthly basis. So, with all of that, how can a company that’s like boasting about all this success need to cut this deeply? The answer is simple. They didn’t need to. They chose to. To understand all this, there’s a very telling line in Phil Spencer’s email to staff. Follow Microsoft’s lead. So, it’s basically Spencer framing it as part of Microsoft’s overall reduction in management roles. Of course, the thing is we’ve seen far more regular staff than managers get fired this week. And like Xbox can come up with whatever business strategy they’d like like to run their business. They can pivot to Game Pass. They can give up exclusivity. They can stick an Xbox logo in any bit of hardware that can possibly stream a game. But, you know, if Microsoft’s AI business can have 22% growth of uh $4.5 billion last quarter, well, then Xbox needs to improve its own $270 million and 5% growth. It’s not enough to just make the line go up. You’ve got to do better. And of course, a lot of people would say yes, but look, whenever there’s M&A, mergers and acquisitions activity, there will be duplicated roles across a company. Here’s the thing. Removing that duplication can in a very reductive sense be good for that company. Can be more efficient. Obviously, a lot of like missionspecific skills will be lost. But it’s actually far more inefficient. It’s very bad for us, the customer. That’s because those duplicated roles used to be competing against each other, which you know makes the market better for us as consumers. That’s why broadly a lot of this M&A activity has been very, very bad. Now, Phil Spencer has certainly wanted to set up this whole narrative. That’s because in Summer Games Fest, he was laying the groundwork. He talked about how quote, “We’re accountable to Microsoft for running a good business, a healthy business that continues to grow at both top line and bottom line.” before then going on to talk about trade-offs where some things would not be invested in anymore. You know, a fun statement, a bit of a sandwich, right? It’s the meat uh where, you know, one bit of bread was the April cuts and uh the new bit of bread in this horrible sandwich is the July cuts that just happened. But clearly, Xbox leadership have been given their marching orders, you know, direct from Satia, the big man himself. And it seems those orders are that they need to cut massive numbers of their staff and their projects. Now, does this exonerate Xbox leadership from responsibility? No, it obviously doesn’t. Being the central cog in a machine that’s grinding up people and creative projects and, you know, failing to serve customers that um, you know, being a cog doesn’t absolve you just because you didn’t pull the lever. And that’s especially because it’s Xbox’s own leadership decisions that seem to be responsible for a lot of the wreckage we’ve seen over the last few days. Like if you look at the cancelled projects, each of them have been in development for far beyond what the regular scope of a game should be. I mean several have been leaked as just suffering from a lack of direction, a lack of corporate structure. Much like as an example, the closing of Arcane Austin and all the stuff with Tango Gameworks, the decision basically seems to have been to cancel these projects based on how far they were to realistically shipping something. I’m almost surprised that Fable didn’t get killed. And look, much like say with Arcane Austin’s Redfall, which you know was a bit of a a lol cow of its time, these problems stemmed from the era where Xbox just didn’t get involved with their studios, right? They just let their studios struggle on without support as projects stagnated. And it’s kind of weird because they would almost boast, you know, of we’re hands off. We’re not going to get involved in their affairs. But what that actually seems to have translated to is people not having a clear goal, people not having clear management. And you know, it’s very easy to be like, “Oh yeah, we’re very hands-off and cool as bosses.” But does that actually mean that you are giving up? you’re not actually taking seriously your responsibility to provide uh you know direction and clarity certainly seems to be the case and certainly in recent years they have pivoted they have gotten more hands-on across the company we’ve seen a few initiatives of just them sort of connecting their various teams together so they can actually share some talent but this is too it’s too goddamn late obviously just look at all this and now the devs who tried to make all of this stuff work are of course paying the price and the executives who made the decisions are obviously not being punished cuz you Oh, Phil’s still there. Sarah Bond is still there. Matt Booty is still there cuz, you know, their job is actually to preside over making large cuts and things like that. They’re actually sort of paid to uh, you know, not get punished in a way. It’s very odd, but I think you can see how the the funky corporate incentives do actually end up cutting that way. Of course, with all this going on, though, it’s no wonder that staff have really had enough. And all of this led to significant unionization activity. In the months before these layoffs were confirmed, Zenax Workers United was actually given its union contract by Xbox. That was pretty big staff. Once they got the contract, they ratified it. And according to Gamefile, these staff are not immune to the layoffs. But right, they are being protected and they’re being given a voice in the process. And that does actually help. At the very least, they are harder to lay off than people who are not in a union. So those in the union cannot be summarily dismissed. Basically the union gets to negotiate to try and save as many jobs as they can. Obviously that can be contrasted with all of the staff across Xbox who you know woke up one day just to find out they were locked out of their systems before the workday had even ended. Lovely. And we know from various union efforts at Overwatch, at Bethesda, and at Warcraft that basically well protecting the people who make the games that we actually want to play that that was the primary like reason to act. Microsoft still has to negotiate terms of the bargaining committees of those different groups. It’s, you know, it’s not all done signed and and stuff yet. Um, and they may not save everyone from this like executive led lovely gutting of these studios, but what those unions do actually do is give those staff a voice in how any bad news happens. And also, it does protect them from bad leadership if things go wrong in the future. Given how Microsoft operate, which is obviously not in your interests or my interests and also not in the developers interests, I think those developers having more power is actually a good thing. Now I understand say in the American context or in the British context people will rightly have a big old discussion about the place as of you know the trade union movement were there oversteps in the past that made things uncompetitive was it actually something else that led to a de-industrialization etc etc etc we can have that chat the thing that matters though the most is a very simple way of you know the triangles where it’s like the developers the publishers the players it’s easy to make two of those things be balanced it’s hard to make all three be balanced. Right now, it’s obviously all in the publishers favor. I think the more developers have got power, well, the more that that’s actually in line with our interests. And you may say, “Oh, it was only the Warcraft social team who got the boost. They don’t matter. It’s just it’s just PGs that they make. Outsource it. AI the image.” No, those people do actually matter to your best interest if you’re say a World of Warcraft player because they were really good at reaching the community. They were really good at marketing. And funnily enough, if you’re a player of a game, it’s actually in your interest that that game is well marketed by people who are actually passionate about marketing that game, not by some random company who has just got an outsourcing gig. So even in those things where you could say, “Oh, but it’s not the core development team.” Uh, no, it actually does still matter humongously. And that whole thing of saying core development team that often pits developers against QA against support. And the reality is it takes a hell of a lot of people to pull off a game, right? And if all you have is game developers, then congratulations. You probably won’t have that many sales cuz uh you do need customer support, QA, marketing, and all those things to make a game happen. The future then 2026 marks Xbox’s 25th anniversary. And at the last showcase, big Phil Spencer promised a big celebration event. He teased the return of Gears of Forza. Wonder how that’ll happen. Of Fable, of Halo. And in his memo to staff during these layoffs, the studio head Matt Booty promised that the company had more than 40 projects in development. But in this environment where your game can have a gameplay demo at the Xbox showcase in 2024 and then just be cancelled a year later, why would developers trust that Microsoft will give them security? Why would players believe anything that they don’t have in their hands? And that’s the thing. If you’re always short-term optimizing, you know, for the quarter, maybe you’ll lose sight of the big picture. Maybe you’ll just see the numbers as numbers, and you won’t realize that those numbers are a result of a relationship that you cultivate with your customers. Because if you catch a customer, what’s their lifetime value? I’ve been playing World of Warcraft for a very long time. my lifetime value in the thousands. You know, if you lose me, I mean, how many companies would kill to have customer lifetime values that are that high? And that is the sort of just not understanding the big picture and just playing the short-term game. That is really going to damage this industry. And more and more, it’s not that I advocate people check out indie games because I just have a hatred for things with a big budget and a lot of glitz and glam. No, absolutely not. I love the big budget stuff, too. It’s just quite simply the point. I don’t think that’s