Microsoft has executed large-scale overnight layoffs affecting its gaming division, including Xbox and multiple studios acquired through recent deals like Activision Blizzard. The sudden staff cuts have drawn sharp criticism from EA Japan president Shaun Noguchi, which publicly condemned Microsoft’s handling of the situation.
The layoffs resulted in the immediate termination of numerous employees and the cancellation of several ongoing game projects. According to reports, these cuts weren’t necessarily tied to project performance but rather to a company-wide directive to redirect investment toward artificial intelligence initiatives.
What’s particularly shocking to many industry insiders is that these layoffs occurred during what Xbox leadership described in an internal email as their most profitable year ever. This apparent contradiction has made many affected employees angry and led people to question corporate priorities.
Shaun Noguchi‘s public criticism stands out in an industry where companies rarely comment on competitors’ internal decisions. Their leadership called Microsoft’s approach detrimental to both the dreams and livelihoods of gaming staff, highlighting a significant cultural difference in how layoffs are viewed between Western and Japanese companies.
The cuts extend beyond underperforming projects. While some canceled games had been stuck in extended development cycles, reports indicate that even promising and efficiently-run teams were hit by the restructuring. This suggests a broader strategy shift rather than targeted performance management.
Microsoft’s gaming expansion has been aggressive in recent years, with the company spending nearly $80 billion acquiring studios like Bethesda and Activision Blizzard to bolster its Xbox Game Pass service. These massive investments make the sudden pivot to cost-cutting all the more surprising.
Industry analysts note this restructuring matches CEO Satya Nadella and CFO Amy Hood’s push to prioritize AI development across Microsoft’s entire business. The gaming division appears to be just one part of a larger company-wide shift that puts artificial intelligence above traditional software and gaming revenue streams.
East meets West in corporate culture clash
Mass layoffs of this scale are uncommon in Japan, where labor laws provide stronger job protections. The late Nintendo President Satoru Iwata famously criticized layoffs as damaging to team morale and future product quality, once stating, “If we reduce employees for better short-term financial results, employee morale will decrease.”
The situation highlights the growing tension between creative development teams and corporate management as tech giants increasingly prioritize AI and short-term profitability over traditional game development and team stability.
