Microsoft began 2024 on a tragic note, laying off around 1,900 employees across its gaming divisions which impacted several developers at Xbox Game Studios, Bethesda and the newly acquired Activision Blizzard at the time. Xbox boss Phil Spencer has now claimed that the mass layoffs where the result of a “concerning lack of industry growth.”
During a recent interview with Polygon, Phil Spencer addressed the mass layoffs that took place at Microsoft earlier this year and spoke generally about the waves of layoffs currently sweeping the gaming industry. “I’ll say the thing that has me most concerned for the industry is the lack of growth,” said Spencer.
He continued:
“And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth — because why else does somebody own a share of someone’s stock if it’s not going to grow? — the side of the business that then gets scrutinised is the cost side. Because if you’re not going to grow the revenue side, then the cost side becomes challenged.”
“We’re a business, I’ve said over and over. I don’t get any luxury of not having to run a profitable growing business inside of Microsoft,” added Spencer. Reflecting back on how those layoffs personally impacted him, Spencer said, “I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don’t want this industry to be a place where people can’t, with confidence, build a career.”
“So that’s why I keep pivoting back to: How does this industry get back to growth? But to your question, for us as Xbox or any of the teams that are out there, it is really an outcome of an industry that’s not growing. It can grow and it will grow again. But you see this time right now and the implications have human impact. And we should all reflect on that and think about it.”
Many commenters pointed out that during the COVID pandemic, when billions of people were confined to their homes for indefinite amounts of time, gaming saw a massive surge – one that, naturally, wouldn’t continue to grow as pandemic restrictions eased up over the years and normality slowly returned. Unfortunately the current generation has yet to fully recover from it. Developers at GDC reportedly even stated that the PS5 Pro was completely unnecessary at this point as the base PS5 has yet to be pushed to its full potential.
Source: Polygon
