What many of us feared has turned out to be true. Xbox confirms thousands of employees layoffs as part of the biggest restructure in its history, with Xbox head Asha confirming the news in an internal email sent to staff. If you care at all about where Xbox is going, or where the whole gaming industry is heading, this is the news to read today.

What Is Actually Happening at Xbox

Around 3,200 roles are being eliminated across the Xbox business throughout the current financial year, with roughly 1,600 of those happening right now. These cuts are not limited to one team or one corner of the organisation. Activision, Bethesda and ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios are all affected.

Four Studios Are Departing Xbox Management

Despite everything, there is some good news. Compulsion Games and Double Fine Productions are becoming independent again, and they get to keep their games and the rights to them. That's important because it gives them a chance to keep making games instead of starting from nothing.

xbox layoffs

Ninja Theory and Undead Labs are being sold to new owners instead of shutting down. Ninja Theory will keep working on Senua's Saga: Hellblade II, and Undead Labs will continue developing State of Decay 3. After the early rumors about Ninja Theory's future, it's a relief to know Hellblade II won't be left unfinished.

Arkane Lyon's situation is less clear, though. The announcement says the studio is entering a consultation process to look at its future, but that doesn't really explain what will happen. It's easy to overlook that line, but it matters. The team behind Deathloop deserves a clear answer about what's next, not just vague corporate wording.

The Gaming Industry Is Going Through a Tough Time

What stands out most is how honest Xbox's email is. Instead of calling these changes an exciting new direction, it admits that the gaming industry is struggling. It says the console business is going through one of its toughest periods ever and that Xbox's profits have been much lower than other parts of Microsoft's business. It's unusual to see a company openly admit that.

I have also heard rumors that PlayStation may not be far behind. If that happens, this won't just be an Xbox problem. It will show that the entire gaming industry is going through a difficult period.

Xbox deserves some credit for being unusually honest about the situation. Even so, 3,200 people losing their jobs from the Xbox layoffs is the real story here. Hopefully, these changes help Xbox in the long run, but that doesn't make things any easier for the people who lost their jobs today.