It’s been revealed that Microsoft will lay off around a whopping 650 employees, or 3 percent of the Xbox’s global workforce.

Microsoft employees in the US will receive exit packages that include severance, extended healthcare and outplacement services, while international employees will receive different packages depending on their location.

However, there are no games or game studios/developers being cancelled or shut down in this round of layoffs.

This marks the most recent round of layoffs Microsoft has undergone since its 2023 closure of the Activision Blizzard acquisition, and the second major one by them. The first was back in January 2024, when Microsoft laid off 1,900 employees across Xbox, Activision Blizzard and ZeniMax.

In May 2024, it was revealed that Microsoft shut down three studios, Arkane Austin, Alpha Dog Studios and Tango Gameworks, run by its subsidiary Bethesda Softworks, and merged a fourth, Roundhouse Games, with its “The Elder Scrolls Online” team under ZeniMax Online Studios. This shocked the gaming community, especially after the success of Tango Gameworks’ Hi-Fi Rush.

That’s not even counting layoffs at other studios in the games industry, such as Supermassive Games and many more.

2024 has not been a good year for the games industry, and it doesn’t seem to be improving anytime soon.

Check out Phil Spencer’s full memo below (via Variety):

Subject: Changes to Microsoft Gaming

For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming—mostly corporate and supporting functions—to organize our business for long term success.

I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.

With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.

Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.