Massive layoff at Xbox division – closes studio

January 23, 2009

Xbox division recieve major job cuts - closes studio Microsoft recently announced that the company would be laying-off 5,000 employees due to a drop in profits. This is the first mass layoff in the history of Microsoft. However, news has trickled out that the Xbox division will be suffering the brunt of the job cuts.

Word has been trickling out that the Entertainment and Devices Division (EDD) will receive the brunt of the mass layoff. The EDD division consists of the Zune, PC gaming and the massive Xbox division. The EDD is headed up by the well known faces: Shane Kim, Don Matttrick, Phil Spencer and the friendly Aaron Greenberg.

Word has come out that Microsoft owned site, Gamerscore Blog has ceased operation. Many of the former employees have revealed that all of the writers have been laid off.

Also, notorious VentureBeat writer Dean Takahashi, revealed that approximately 30 percent of Microsoft’s internal video game testers have been laid off. What in the world is Microsoft thinking by laying off quality assurance testers for the video game division?

The journalist also stated that the game division will receive a massive management restructuring next week. In the corporate world, management restructuring usually means firing and consolidating. Could this be the end of Aaron Greenberg? I sure hope not.

Microsoft also announced today that the company will be shutting down one of its longest running game studio, ACES. The studio has been responsible for various franchises such as long time veteran, Flight Simulator.

According to Microsoft the decision to shut down the studio was made in order “to align our[Microsoft's] people against our[Microsoft's] highest priorities.” Obviously the highest priority for Microsoft is Windows.

I have talked about Microsoft’s shift towards the casual market and these events seem to indicate that the change will not be gradual but possibly abrupt. There is also some indication from Microsoft that the company wants to focus more on its core business such as Windows. This is in contrast to Sony who is laying-off employees in its core businesses and leaving the gaming division alone (for now). Could we see a leaner Xbox division by next month?

17 Responses to “Massive layoff at Xbox division – closes studio”

  1. darkwhitehair:

    this is sad… but I do want them to back off of Game for windows Live and leave it to Steam…

    again… very very sad…

  2. Bourne:

    Relax Microsoft is fine, OBVIOUSLY if a company such as Microsoft is laying off staff, this is a positive sign, this means that Microsoft are just…. Taking it easy while everyone else is drowing in this recession.

  3. lock_down:

    I wonder if kev will be as critical of Microsoft for laying off games staff as he was for Sony.

  4. Dirk:

    December 10th, 2008

    16,000 Sony redundancies say they have f*cked up massively & PS3 is as good as it’s ever going to get.
    Sony is in real trouble and will be concentrating on other things…….you know, like their actual survival in the coming economic slump.”

    LOL, I find it funny all the Xbots are nowhere to be seen now.. apparently the usual suspects: CarlB, Happyhokum, Kev, and CAD are avoiding this story like the plauge.

    I’m sure if there was a PS3 fanboy equivelant to Happyhokum he would say something like:

    “Xbox 360 is in real trouble it looks like the division will close down or start copying the Wii completely.
    Microsoft should concentrate on important things such as Windows or their survival…. blah blah.. BS BS BS..”

  5. lock_down:

    “I find it funny all the Xbots are nowhere to be seen now.”

    Exactly Dirk.

    Why is thread so quiet?

    If this was about Sony laying people off, this thread would be going into hundreds of comments about how Sony are a disgrace etc etc etc.

    This thread will always be a telling reminder of how shallow, hollow and pathetic the extreme Xbox cheerleaders are.

    We could say what we want about Xbox users on this thread, because they’ll never reply here.

    Because if they did, they certainly wouldn’t comment on Microsoft laying off staff, and when pressed on the issue, they would vanish from this thread altogether.

    Sad, really.

  6. hizark21:

    It’s a step in the right direction. Game development consumes a lot of resources and is not in Microsoft’s focus. But I think MS would sell the division. Or them may cut costs and wait until they find a buyer.

  7. Dirk:

    I looked back at the article where they talked about the job cuts for Sony and all the Xbots were over it.

    Apparently, we have some doublestandards going on here. This story is hot else where, everybody is saying its the “Doom of Xbox” now.

    I wouldn’t be suprised if Msft axes the Xbox division and focus on Windows. That is where they make the most money.

  8. lock_down:

    “Doom of Xbox”…genius.

    I don’t think they’ll dump Xbox though, MS look like they’re determined to succeed in gaming. And they’re looking to expand Xbox Live as well.

    Who knows though. With Ballmer in charge, anything could happen.

  9. Happyhockum:

    No, you’re completely wrong Dirk & lock_down.

    (though your obvious & silly paranoid fanboy spin “this thread would be going into hundreds of comments about how Sony are a disgrace etc etc etc” does speak volumes about where you’re coming from)

    I didn’t come to post here (until now) cos it’s a bit of a non-story.

    Even if you do rate it as a big story?

    Well ok, fine, feel free.

    But at least have the honesty to admit that the Microsoft problems reported are in nothing like the same league as the problems Sony has been having
    (16,000 redundancies, a $1 billion+ loss for the Sony group as a whole, the first in 14yrs, apparantly, and the closure of Japanese production facilities – this last one is a really big deal).

    The truth is that 5,000 redundancies (spread across the group – I wouldn’t want to work on the Zune side of things now if it was anything to do with me) is not such a big deal to Microsoft.

    (I wonder how many are contract staff or seasonal workers… poster here told me they don’t count as much)

    The truth is – as most international commentators seem to agree – that the global economy is going to take a huge dive this year, probably into next as well and then stay flat for several years after that.
    Some speak of a slow crawl to recovery by 2017.

    Everybody is going to suffer.
    So it’s not a matter of one not doing something the other is being forced to do, it’s a matter of how bad it is.

    Microsoft made $4 billion+ in the last quarter of 2008 alone.

    Sony have been bleeding money for years (and yes PS3 and Blu-ray have been a huge part of that).

    Now if you want to take those facts as a value judgement (either way for either company) then go ahead.
    But it’s only a reflection of your own prejudices, nobody else’s.

  10. lock_down:

    “I didn’t come to post here (until now) cos it’s a bit of a non-story. ”

    Some nice spin there Happy…you should go into politics.

    “Some speak of a slow crawl to recovery by 2017″

    Sounds like a depression to me.

  11. CarlB:


    Kindly remind me of the comments where I was critical of Sony laying off workers. Please detail when I was put into the “XBot” camp when it came to Sony, was it when I was ranting about how great FF Tactics was on my PSP or how great it will be to play FFXII and Persona 4 on the PS2 when I get back? Or are you so blinded by the heavenliness that is Sony PS3 promise and potential that you couldn’t recognize the many comments stating I was waiting for a lower priced redesign with BC and am looking forward to God of War 3? You sure did manage to go back and pull Happyhockums statement and label me though, didn’t you? Rescind your comment or continue to crap on your credibility as a reasonable person that can see the problems with any company and or their console, let alone their advantages, while not labeling people you obviously have no clue about. Final Fantasy Tactics War of the Lions, Jeanne D’ Arc, GTA, Castlevania Dracula X Chronicles, Sega Genesis Collection, Sid Meier’s Pirates, Ultimate Ghosts ‘n Goblins, Liberty City Stories and my PSP rule out here and keeps me plenty busy in my off time, my only wish is that it could have trophies too… oh well; Microsoft doesn’t have one either, so I guess Sony rules over Microsoft in the handheld department as well as with PS2 compared to XBox. I view this article the same as I did the Sony article, unneeded/extra cargo needs to go in lean times, and I’m not about to launch into some fanboy diatribe accusing others of being PiSsBots or XBots because of it. In any large company or organization, there is always around 10% that perform subpar, expendable, or unnecessary work when compared to the company’s bottom line in hard times. It sucks for the people getting laid off, and even more for the company’s reputation. As it stands now, Microsoft needs to do this when viewing this article, and Sony does as well when looking at the last one and seeing predictions for another 16,000 being laid off this year, as well as analysts (not Pachter) predictions for another billion dollar loss for Sony this year. My first thought on this was 5,000 isn’t nearly as much as 16,000, let alone the predicted 32,000, but I’m staying away from it, because both are some pretty massive companies, and I don’t see either the companies or their respective console going extinct anytime soon.

  12. CarlB:

    On that note, now that this has happened, maybe if Microsoft or Sony were more profitable or the recession hadn’t happened then they would not have to lay off people. All considered, the upside is Sony is less cocky than they first were at PS3′s launch now that they are feeling the pressure from both Nintendo and Microsoft combined, and Microsoft is a real competitor to Sony in this gen compared to last.

  13. Barnabe Jones:

    Wow. First Vista, then the Zune, then all of the warranties they have had to pay for the 360. Well if they took there time and waited to release a fully working product to the market, maybe this could have been avoided.

  14. Barnabe Jones:

    Castlevania Dracula X Chronicles – allmost gave me a stroke. That fricking game is so hard. I couldn’t beat Death (the grim reaper) on the third or fourth board.

  15. CarlB:


    Zune and 360. I had an even worse experience with my Zune as it was gone longer than the 360 for it’s RRoD. I have had both back since and they work fine, but though I regret the temporary loss, I am glad they took care of me. I’m not about to say they are the most reliable pieces of hardware as they aren’t, but I would say my overall experience with both of them has been enjoyable. I chalk it up (although don’t excuse it or think it is an excuse) to Microsoft and a learning curve with moving from software only to adding hardware products and being relatively new to that. The original reason I got a Zune was getting away from Apple’s then proprietary software/DRM music only philosophy, and the original reasons I got a 360 was to move on from the XBox and get a next gen console a year early. I paid the price with a RRoD for two weeks in three years, but considering the overall fun I had, the way Microsoft took care of me well over twice out of the original warranty period, and the fun I will continue to have with 360, I don’t think I would do things differently if given a second chance. Considering all the changes that PS3 has been through (for the better), I am looking forward to when they finally have it all consolidated and standardized with a redesign and God of War 3. The thing is, for me at least, the 360, a PS2, PSP, and DS seem to provide more than enough gaming for me to stay busy for the foreseeable future. As for Vista, I haven’t had a problem with it, but I hear XP SP2 is still good for others. I don’t know, I’m not really into networking or a power user.

    CDX is definitely hard, though I haven’t spent enough time with it to tell if it is on the level of a Ghosts ‘n Goblins/Ghouls ‘n Ghosts type of difficulty. So far FFTWoL is my ultimate desert game.

  16. Barnabe Jones:

    I have only used Vista for a few minutes here and there. I have XP on my home and work PCs. From what I’ve seen a Vista, it seemed like it was pretty good to me.

    FF Tactics is on the list. The list seems to get longer every day though. I just don’t have enough free time to get to everything. I think I’m about 16 hours into FF IV. When I finally have that finished up, I’ll give tactics a try.

  17. CarlB:

    FF Tactics is actually one of the few games I would recommend getting the strategy guide for if you can. Not because it is necessary to win, but because of the way it lays out all of the information contained within the game. Let me know how FF IV goes, I have it for the DS but haven’t played it yet.

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