Letter from Phil Spencer after Xbox layoffs: this is how the complicated internal situation remains

Phil Spencer explains in letter how painful it is to lay off all these Xbox workers.

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Following the confirmation of the new wave of layoffs at Xbox, Bethesda, and King, Phil Spencer has shared an internal message with Microsoft Gaming employees explaining the context of this difficult decision and outlining the company’s strategic focus for the next few years.

In his message, Spencer acknowledges that these measures come at a particularly active time for Xbox, with records in player numbers, hours played, and a solid release roadmap. However, he defends the need to prioritize the strongest opportunities and reduce management structures to gain agility across the organization.

Phil Spencer’s Full Letter: Concentration, Discipline, and Tough Decisions

“Today, we’re sharing decisions that will affect our colleagues in our organization,” Spencer begins. “For Gaming to achieve lasting success and allow us to focus on strategic growth areas, we will be ending or reducing work in certain areas of the business.”

Phil Spencer makes it clear that this move is part of Microsoft’s plan to simplify internal structures and focus on teams, projects, and technologies with the greatest potential. He also explicitly thanks the affected employees for their work:

“We wouldn’t be where we are today without the time, energy, and creativity of those affected. These decisions don’t reflect the talent, creativity, or dedication of the people involved.”

Additionally, he confirms that the Human Resources teams are already in contact with the impacted employees, offering them a severance package in line with local legislation, including salary, medical coverage, and priority access to internal job openings within Microsoft Gaming.

For now, the total number of layoffs globally has not been specified, but there have been reports of impacts at the Bethesda office in London, cuts at ZeniMax, and at the King team, where around 200 people are said to have lost their jobs.

Phil Spencer’s Full Letter:

Today, we’re sharing decisions that will affect our colleagues in our organization. For Gaming to achieve lasting success and allow us to focus on strategic growth areas, we will be ending or reducing work in certain areas of the business and following Microsoft’s example of eliminating management levels to increase agility and effectiveness. Out of respect for those affected today, team leaders will share the details of today’s notifications and any organizational changes over the next few days.

I recognize that these changes come at a time when we have more players, games, and hours played than ever. Our platform, hardware, and game roadmap have never been stronger. The success we’re seeing now is based on tough decisions we’ve made previously. We must make decisions now to continue succeeding in the next few years, and a key part of that strategy is the discipline to prioritize our strongest opportunities. We’ll protect what’s thriving and concentrate our efforts on areas with the greatest potential, while meeting the expectations the company has for our business. This focused approach allows us to deliver exceptional games and experiences to players for the next generations.

Prioritizing our opportunities is essential, but that doesn’t diminish the significance of this moment. In short, we wouldn’t be where we are today without the time, energy, and creativity of those affected. These decisions don’t reflect the talent, creativity, or dedication of the people involved. Our momentum isn’t accidental; it’s the result of years of dedicated effort from our teams.

The Human Resources department is working directly with affected employees to offer them severance package benefits (in line with local laws), including salary, medical coverage, and job placement resources to support their transition. Employees whose positions were eliminated are encouraged to explore openings at Microsoft Gaming, where their applications will be given priority consideration.

We’ll be closely following the next steps for Xbox and this complicated situation.