According to sources, the Xbox gaming division under Microsoft is planning to implement layoffs in the coming months due to deteriorating operational performance.
Xbox CEO Asha Sharma informed all employees via an internal memo on Wednesday that the division's "accountability margin," an internal Microsoft metric for business profitability, has fallen to 3% for the fiscal year ending this month. She described this trend as "unsustainable." The specific calculation methodology for this margin is not currently clear, while Microsoft's overall corporate gross margin is approximately 68%.
The exact number of positions to be eliminated has not been disclosed, and an official Microsoft spokesperson declined to comment on the matter.
Sharma, who assumed the role of Xbox head this past February, stated in the internal communication that Xbox expenditures have been consistently rising. Over the past five years, investment in console hardware and game development alone has exceeded $20 billion, a figure that does not include Microsoft's $75 billion acquisition of Activision Blizzard. During the same period, Xbox's annual revenue contracted by nearly $500 million. While Sharma did not provide more detailed revenue breakdowns, she separately noted that after a continuous decline lasting over eight months, Xbox Game Pass (XGP) subscription numbers have recently "returned to a growth trajectory."
Sharma also informed employees that the cost of key console components has surged more than fourfold since last autumn, persistently squeezing Xbox's profit margins.
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