Key Takeaways
1. Microsoft laid off over 15,000 workers in 2025, marking it as a challenging decision for CEO Satya Nadella.
2. Despite layoffs, Microsoft reported strong financial performance with a record revenue of $245 billion and a profit of $109 billion.
3. The company’s gaming division saw a 5% growth in Q3 2025, driven by Xbox Game Pass and new game launches like Call of Duty Black Ops 6.
4. Significant project cancellations in the gaming division include the Perfect Dark Reboot and other high-profile titles, as Microsoft shifts focus to AI.
5. Internal tensions arise as laid-off employees are reportedly replaced by AI tools, raising concerns about the future of innovation in the gaming sector.
Microsoft’s CEO, Satya Nadella, recently spoke about the company’s major layoffs that impacted over 15,000 workers in 2025, referring to them as “the most difficult decisions we have to make” in a post on Microsoft’s official blog.
Financial Performance
Even after the cuts made in June 2025, which saw 9,100 employees let go, Nadella claimed that the company is “thriving.” He pointed out a record revenue of $245 billion, which marks a modest 16% increase from last year, and a profit of $109 billion, representing a 24% rise compared to the previous year.
Gaming Division Insights
In addition, Microsoft’s gaming sector, Xbox Game Studios, reported a growth of 5% in Q3 2025. This growth is attributed to Xbox Game Pass and popular first-party games like Call of Duty Black Ops 6, which recorded 3.8 million players on its launch day.
Project Cancellations
Nonetheless, the Xbox division has faced significant downsizing, including the scrapping of projects like the Perfect Dark Reboot and Everwild, which had been under development for almost ten years. Other cancellations include the well-received MMORPG Blackbird from ZeniMax Online Studio, an unannounced FPS from Romero Games, and the shutdown of The Initiative Studio.
Satya Nadella explained that these layoffs are part of Microsoft’s strategic pivot towards AI, with 30% of the company’s code now being generated by AI, leading to a saving of $500 million in support centers alone. Microsoft has invested billions into AI, which has become the company’s main focus. Nadella further remarked:
“Just imagine if all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips, not just to get information, but to use their expertise to get things done that benefit them.”
Internal Tensions and Market Reactions
This change in strategy has caused some internal conflict, as employees laid off from King are allegedly being replaced by AI tools they helped create. Microsoft’s recent actions have sparked concerns among industry experts and gamers, who feel that the company is putting profits ahead of innovation.
Despite the cancellations and closures, Microsoft maintains that it has over forty active projects in development. The company’s stock reached a historic peak of $514.15 on July 25, 2025, which seems to have kept investors calm amidst current gaming controversies.
Industry Concerns
However, observers in the video game sector are doubtful about Microsoft’s choices and their potential long-term effects, particularly in light of the cancellation of eagerly awaited titles and the departure of prominent talent.
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