Microsoft announced it's cutting 4,800 jobs across its commercial business and Xbox division. The Xbox unit is spinning off four gaming studios. Revenue has been shrinking. This is what winning looks like in 2024.
The company didn't specify which studios it's spinning off or what "spinning off" means when your revenue is already in decline. Could be a sale. Could be a shutdown with better branding. Could be Microsoft finally admitting that acquiring game studios and then managing them into the ground is a business model with diminishing returns.
Retail traders who bought Microsoft stock because they heard "gaming is the future" are now learning that the future involves firing nearly five thousand people and ditching the studios you just bought. Revolutionary stuff. The commercial business is also shedding jobs, which means the problem isn't isolated to one division. It's spread across the company like a rash no one wants to acknowledge at the quarterly earnings call.
The Xbox division has been a masterclass in spending billions to acquire content and then wondering why the content didn't magically print money. They bought Activision Blizzard for $69 billion. They bought ZeniMax for $7.5 billion. Now they're cutting thousands of jobs and spinning off studios. That's called synergy. That's called strategic realignment. That's called lighting a pile of cash on fire and calling it a pivot.
Someone at Microsoft looked at the balance sheet and decided the solution to shrinking Xbox revenue was fewer employees and fewer studios. Bold. Counterintuitive. Exactly the kind of thinking that keeps executives employed and everyone else checking LinkedIn. The press release probably used the word "streamlining" six times.
Four thousand eight hundred people just got streamlined into unemployment so Microsoft could admit that buying everything in sight doesn't guarantee you know what to do with it.
Photo by Jonathan Kemper on Unsplash
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