Xbox's Phil Spencer Reflects On Recent Mass Layoffs

Microsoft Gaming CEO Phil Spencer has defended and explained Microsoft's recent decision to lay off 1,900 people from the Xbox division. He told Polygon that Xbox is a business, and like many other businesses, Spencer's job is to make profits. Sometimes that means laying people off now to grow in the future, he said.

"I don't get any luxury of not having to run a profitable growing business inside of Microsoft. And we are that today. But just across the industry... I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don't want this industry to be a place where people can't, with confidence, build a career," he said.

Spencer went on to say the video game industry is projected to be "smaller" in 2025 in terms of players and dollars spent. Big publicly traded companies need to make moves that give investors confidence that profits are coming, and that can mean cutting jobs to get there.

"You get a lot of publicly traded companies that are in the industry that have to show their investors growth--because why else does somebody own a share of someone’s stock if it's not going to grow?--the side of the business that then gets scrutinized is the cost side. Because if you're not going to grow the revenue side, then the cost side becomes challenged," he said.

Layoffs at Xbox are "really an outcome of an industry that's not growing," Spencer said. He went on to say he sees better days ahead.

"It can grow and it will grow again. But you see this time right now and the implications have human impact. And we should all reflect on that and think about it," he said.

The 1,900 layoffs at Xbox came not long after Microsoft and Activision Blizzard merged. Spencer previously said Xbox identified areas of "overlap" after the buyout.

It's not just Xbox that's cutting jobs in the video game industry. 2024 has seen more than 8,000 video game industry layoffs by some accounting, including cuts at PlayStation and mass layoffs at Supermassive. Twitch, meanwhile, laid off 500 people, while Riot laid off around that number as well.

For more, check out GameSpot's feature, "Video Game Industry Layoffs Are Worse Than Ever. How Did We Get Here?"