Xbox huge layoffs: Why? Microsoft’s Phil Spencer, head of gaming, explains

Microsoft made significant layoffs at its gaming operations in January of this year in order to “identify areas of overlap,” establish new goals, and make sure everyone was “aligned on the best opportunities for growth.” Microsoft’s president of gaming, Phil Spencer, discussed the company’s decision to let off around 1,900 workers from its gaming businesses in a recent interview with Polygon. According to Spencer, the reason for the layoffs was a “concerning lack of industry growth.”
Given that the industry is expected to decline in terms of players and revenue next year, Spencer voiced his concerns about the lack of development in the sector.

“I’ll say the thing that has me most concerned for the industry is the lack of growth,” Spencer said to Polygon. “The cost side of the business is then scrutinised when you have an industry that is expected to shrink in terms of players and dollars next year, and you have a lot of publicly traded companies that are in the industry that have to show their investors growth—bbecause why else would someone own a share of someone’s stock if it’s not going to grow? Because the expense side will face challenges if the revenue side does not rise.”
Spencer highlighted that Microsoft needs to continue growing and being profitable, just like any other company. We are a company, as I have often said. Within Microsoft, I don’t have the luxury of not having to manage a successful, expanding company,” he said.
During the COVID-19 epidemic, when billions of people were confined to their homes and resorted to gaming for enjoyment, the gaming industry saw a notable boom. But once the pandemic limitations were relaxed, the sector found it difficult to keep up the same rate of expansion. Due to the need for many businesses to reduce expenses in order to be viable, this resulted in a wave of layoffs across the gaming sector.
“I reflect on friends of mine in the industry who have been displaced and lost their jobs, and I don’t want this industry to be a place where people can’t, with confidence, build a career,” Spencer said in response to a question on the layoffs’ personal effects.
“So that’s why I keep pivoting back to: How does this industry get back to growth?” he said, highlighting the significance of the sector figuring out how to resume growth. To answer your point, however, it is actually a result of a stagnating industry for both Xbox and other teams. It may and will continue to expand. However, as you can see, the consequences of this moment have an effect on people. And we need to all consider and ponder it.”