Xbox boss Phil Spencer says layoffs were ‘painful’ but necessary for ‘long-term success’

Spencer addressed the recent layoff of 10,000 Microsoft employees in an email sent to gaming division employees.

Phil Spencer at The Game Awards 2019

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In an email sent to employees in Microsoft’s gaming division and shared by an employee with Kotaku (opens in new tab), Xbox boss Phil Spencer said it “hurts” when people get laid off, but that in the long run it’s the best thing for the company.

“This is a challenging moment in our business, and this week’s actions were painful choices,” Spencer said. “The Gaming Leadership Team had to make decisions that we felt set us up for the long-term success of our products and business, but the individual results of those decisions are real. I know that hurts. Thank you for supporting our colleagues as they process these changes.

“Over the coming weeks we will have many opportunities to connect and answer your questions, including the Monthly Gaming Update next week for teams who attend that meeting, and I am in close contact with teams at ZeniMax to provide support. The GLT and I are committed to being as transparent as we can. Moving forward with ambiguity is challenging, but I am confident that together, we will get through this difficult moment in time.”

Spencer’s internal email came two days after Microsoft announced that 10,000 employees were being laid off (opens in new tab) worldwide. Microsoft didn’t specify where the cuts were coming from, but a Bloomberg report said the cuts would impact Microsoft’s gaming division, which includes studios like Bethesda Softworks and 343 Industries.

Former Halo Infinite senior multiplayer designer Patrick Wren effectively confirmed that report (opens in new tab) a day later. “The layoffs shouldn’t have happened and Halo Infinite should be in a better state,” Wren tweeted. “The reason for both of those things is incompetent leadership up top during Halo Infinite development causing massive stress on those working hard to make Halo the best it can be.”

The elimination of 10,000 people obviously can’t be ascribed directly to bad calls by 343 management, but Wren’s comments were at the very least heartfelt and sincere. Spencer’s statement, by comparison, feels very specifically crafted to be superficially soothing without saying anything.

“Xbox has a long history of success thanks to the work you do in service of players, creators, and each other. Your work is so deeply appreciated and valued in these times of change and is integral to our business momentum. I am confident in our future and proud to be part of this team, but also conscious that this is a challenging time and I want to thank you for everything you do here.”

The announcement of layoffs came just a couple weeks after workers at ZeniMax Studios voted to form the ZeniMax Workers United/CWA union (opens in new tab), the first game studio union at Microsoft and, for now at least, the largest game industry employee union in the US. Those employees may receive at least some degree of protection during the layoff process, according to a statement (opens in new tab) released by the Communications Workers of America union.

CWA reps have been in touch with Microsoft & the company recognizes its obligation to bargain over any proposed layoffs of CWA members at ZeniMax. The ZeniMax worker bargaining committee will be developing proposals that reflect their needs & provide alternatives to layoffs. 2/January 19, 2023

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“Representatives from CWA have been in touch with Microsoft, and the company recognizes its obligation to bargain over any proposed layoffs of CWA members at ZeniMax,” the union said. “Members of the ZeniMax worker bargaining committee will be developing proposals that reflect their needs and provide alternatives to layoffs.”

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