Is Xbox dying after massive Microsoft layoffs? It’s complicated

what's next for xbox

Microsoft laid off nearly 2,000 workers in its gaming division and it’s spawned questions about the fate of Xbox, whether the brand is dying, or whether it might be fundamentally changing.

The announcement of 1,900 layoffs across Microsoft’s gaming division shook the games industry. Coming so soon after mass layoffs from the likes of Riot Games, it’s difficult for fans to gauge the impact of these layoffs on the future of gaming. Although the layoffs primarily hit development, marketing, and community-focused positions, another Microsoft division remains unstable.

Microsoft’s hardware division saw massive changes in 2023 and its effects still haven’t fully materialized. Judging from the trends within the company and reports from major outlets, the company is looking to make significant adjustments to how it approaches the Xbox and perhaps video games in general.

Changes are coming to the Xbox hardware division in 2024

Microsoft saw changes in leadership for its hardware divisions in 2023 and moved away from physical media.

Massive layoffs have become an unfortunate annual tradition for Microsoft. At the start of 2023, Microsoft announced it was laying off 10,000 employees, which it staggered out across three months. Around the same time, an internal memo by Microsoft CEO Satya Nadella popped up hinting at significant changes to its hardware portfolio.

Longtime Microsoft chief product officer Panos Panay left the company in September 2023 and took his talents to Amazon. He oversaw much of the hardware development on the non-gaming front. A report from Business Insider states that Panay left due to Microsoft scrapping several of his proposed Surface hardware projects. 

Amidst the January 2024 layoffs, Jez Corden of Windows Central claims that Microsoft has shut down several departments tasked with bringing Xbox games to physical retail. All this news left many speculating that Xbox will quit physical media altogether. There’s also been speculation that Microsoft may take the Xbox brand in the direction of something more akin to modern-day Sega or what Google initially planned for the Stadia.

Is Xbox dying?

Microsoft confirmed plans to continue producing Xbox consoles into 2028 according to documents it provided to courts during the FTC investigation into its acquisition of Activision Blizzard. But according to testimony, those plans aren’t set in stone.

The FTC documents leaked on September 2023 about Microsoft’s upcoming consoles. The leaks revealed a new Xbox console codenamed “Brooklin” and an untitled hybrid gaming device that utilizes cloud technology. The “Brooklin” notably lacked a disc drive, making it entirely digital, coinciding with Microsoft winding down much of its physical media and hardware. The planned next-gen Xbox consoles included a hybrid gaming device that utilizes cloud technology, set for release in 2028.

During the investigation, Microsoft Gaming CEO Phil Spencer stated that the Xbox brand could be nixed by Microsoft if it fails to meet projections. Among the expectations were significant gains in Xbox Game Pass subscriber counts, but numbers suggested a prolonged stagnation on that front when the documents leaked.

On October 2023, Microsoft restructured its Xbox gaming and marketing leadership, barely two weeks after the official acquisition of Activision-Blizzard. Sarah Bond rose to the position of Xbox President, and it is under her leadership that the future of Xbox’s physical media lies. 

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Written by Gab Hernandez

Gab Hernandez has a particular love for video games that give players control over the narrative direction, such as Divinity: Original Sin 2 and Disco Elysium. Gab spends just as much time playing games as they do gushing about them online to anyone who will listen. Their work has also been seen on TheGamer, Gfinity, and Wargamer, and you can follow them on Twitter / X at @HardlyWorkinGab.

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