Goddammit, Microsoft.

The games industry is still in an odd place. Various megacorporations are taking a big breath in and preparing for what appears to be an inevitable economic downturn. According to The Wall Street Journal, younger Americans have spent 25% less on video games this year than they did in 2024. The reason for this is simple: they have less money to spend on just about everything. When it boils down to a new game or a month's worth of ramen noodles, you bet your bottom dollar those starchy treats are going to win.

A huge sector of the population that is leaving education and looking to a job or a trade is finding it difficult to find employment. They are not getting the kickstart that many generations before them got. Young Americans are spending less because they have less disposable income, and where America goes, the world follows. J.P. Morgan currently forecastsa 40% probability that the good old US of A will be in a recession by the end of this year.

This will prompt companies to become agile. To trim fat. To reconsider company-wide goals and priorities to keep them in line with corporate culture. Companies with hundreds of thousands of employees and shareholders will need to excise some of the former to please the latter. Layoffs were once seen as a terrible indicator of a company's health and were a last resort when it came to keeping a business afloat. Now they are a regular occurrence that has the opposite effect, as investors often feel a willingness to make “hard decisions” and put profits first is what they want, reflecting exactly the kind of environment they wish to invest their capital in. 

Gaming is far from immune to this, and one main offender has struck again.

One Microsoft 

Microsoft had a busy week, laying off thousands of people, cancelling projects, and shuttering at least one studio completely. It’s big news, unsurprisingly, when a company that has posted healthy profits takes steps to reduce workforce and costs. For the March quarter, Microsoft reported $26 billion in net income on $70 billion in revenue. They have followed that up with 9000 layoffs while Phil Spencer talked about what a strong place the company is in, but this has become standard operating procedure for Microsoft at large, and Xbox in particular. 

Microsoft’s fiscal performance is stronger than anticipated right now, thanks to money rolling in from cloud services and AI, keeping its spot as one of the most profitable companies on the S&P 500. It is a stock market index that tracks the stock performance of 500 top companies listed on the United States stock exchange. Those companies are where the wealthiest individuals send their money to make even more money, and investing in a portfolio with broad interests across the S&P 500 is often considered a reliable way to generate additional returns. In short, Microsoft is currently as close as you can get to a long-term certainty on the stock market. A company that has been around, and will continue to be around, and will likely be worth more in five years than the price you pay for shares now.

Microsoft has also been on something of a streak of layoffs lately. In January 2023, they announced 10,000 job cuts, impacting the Holo Lens and Microsoft Edge teams, as well as 343 Industries and Bethesda. This remains the biggest headcount reduction (read, layoffs) that Microsoft has engaged in since dropping 18,000 people after acquiring Nokia in 2014. 

January 2024 brought 1,900 layoffs at Activision Blizzard and Xbox, with some folks at ZeniMax being impacted as well. May 2024 brought the closure of Hi-Fi Rush developer Tango Gameworks and Redfall developer Arkane Austin. September 2024 saw 650 Xbox employees dropped as part of further restructuring after the Activision Blizzard purchase. 

May 2025 saw another 6,000 people laid off, with the company claiming that it was necessary to continue to implement organizational changes to position itself for success in a dynamic market. That’s basically corporate speak for “we spent a lot of cash, and now we have a lot of excess. The excess just happens to be people.”

Now, in July 2025, we have 9,000 more. King, ZeniMax, and Turn 10 have all been hit, while The Initiative has been closed down and Perfect Dark has been cancelled. Everwild from Rare has also been cancelled, but, for now at least, Rare has not been closed.

Not once has any of this had a negative impact on the share price of Microsoft to any serious degree. The July 2 announcement that more jobs were being cut actually added $7 to the share price of Microsoft. We have gone from layoffs meaning a company was circling the drain to them not just being a part of business, but a desirable part of business.

You can also bet your ass that this won’t be the last of it. There is still a lot of math to be done internally at Microsoft, and dollars will be budgeted for the best returns; people and projects that do not promise those returns will be excised.  

The problem with being so big and buying all those studios is now internal competition. Why pay someone to make a game that is predicted to make back X amount per dollar invested when you can pay someone else to make a game that is predicted to make back Y amount per dollar invested? When Y is bigger than X, just get rid of X and give that dollar to Y.

There is a terrifying simplicity to it, and almost idiotic logic at play that pervades every business, everywhere. Just do the thing that, by the projections, makes more money. Nice down. Specialize. Go with the sure thing.

Sadly, the only certainty right now is that Microsoft will lay off more people before the end of the year.

What’s happening, Destructoid?

Adam Newell has been besieged by a fit of madness and is trying to predict what kind of Pokémon team Henry Cavill would have if he cared about pocket monsters as much as he cares about horrible creatures from beyond the Eye of Terror.

Kyle Ferreria longs for a Break of Fire IV remake, because we all need to wish for something. - “I may just be selfish here, but I really want to see the legendary Fou-Lu (the ancient dragon) in HD, with his clothes billowing in the wind and his katana glinting in the sun. I want to see him transform into a legendary dragon in real time.”

Scott Duwe has been deep in the woods with Donkey Kong Bananza, and he reckons it might just cause a flutter for fans of 3D platformers. - “Donkey Kong Bananza is destined for countless hours of smashing through terrain to discover unlockables and upgrades, including treasure maps that show special items on a 3D overview of the area, new clothes that offer different abilities, and several different currencies that can be used within the world at different merchants.”

Kacee Fay has been spending time deleting people from the island in Fortnite’s Blitz Royale mode, and believes it’s way too good to be a short-term thing. - “Although it was designed with a mobile audience in mind, Blitz Royale’s quick, 32-player round, packed with returning old items and loads of powerful loot, is so good that I’ve been playing it more than classic Battle Royale. It feels incredibly refreshing and fun in a way no other Fortnite LTM has, and I’m really hoping it ends up sticking around for good.”

Meanwhile, if you are in the mood for a book recommendation, Luci Kelemen found this particular novel so good it even got past his general dislike of fantasy. - “You see, what I found most interesting about it is that I don’t tend to like these things—or fantasy stories in general—and yet I deeply enjoyed the story all the same. Not only that, but it survived multiple revisits across different languages, even once I had an extra set of impressions layered atop the tale by reading the author’s later work.”