In an interview conducted at GDC 2024, Microsoft Gaming CEO Phil Spencer answered various questions. Among other things, it was about the extensive cost-cutting measures that led to the dismissal of 1,900 employees in the Xbox division.
Those responsible at Microsoft also initiated extensive cost-cutting measures this year and laid off employees in January more than 1,900 employees the Xbox division.
In an interview that Polygon conducted at the Game Developers Conference 2024, the topic of layoffs was taken up again. According to Phil Spencer, Microsoft's gaming CEO, the publishers' savings and thus the layoffs in the Xbox division are primarily due to the slowing or partial lack of growth in the video game industry.
The bottom line is that Microsoft and other publishers are “listed companies that have to show growth to their investors.” If corporations fail to increase revenue, managers will be faced with the task of optimizing costs. Which brings us to the layoffs of the last few months.
Spencer on the state of the video game industry
“We are a company,” Spencer added. “I've said it again and again. I don't have the luxury of not having to run a profitable, growing business within Microsoft. (…) But across the industry… you mentioned it. Sitting here at GDC, I think of friends in the industry who have lost their jobs and been made redundant.”
As Spencer explained, the management of publishers and development studios must in the future be concerned with making the video game industry a place in which people can confidently build a career and thus a professional future.
At the same time, Spencer expressed confidence that we are only dealing with a snapshot of the current crisis in the industry.
Spencer exercises confidence
Regarding the future development of the video game industry, Spencer added: “That's why I keep coming back to this: How can this industry find growth again? But to your question, for us as Xbox or any of the teams out there, it's really a result of an industry that's not growing.”
“It can and will grow again. But you're seeing this time right now and the effects are having human consequences. And we should all think about that,” Microsoft’s gaming CEO concluded the topic.
Finally, Spencer pointed out that he sees exclusive titles as a financial risk. Here too, Microsoft's gaming CEO cited the industry's lack of growth. This in turn means that exclusive titles are increasingly becoming a risk that should not be underestimated due to the constantly rising development costs.
This is one reason why Microsoft is concerned with “bringing Xbox to more and more screens” and addressing larger target groups. Whatever this all means for the future direction of the Xbox division.
Which: Polygon
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