Xbox will 'end or decrease work in certain areas of the business,' CEO Phil Spencer says

Certain aspects of the Xbox business will cease, Microsoft Gaming CEO Phil Spencer says, but specifics remain unclear.

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Today, Microsoft conducted layoffs that could affect 9,000 people, including workers at Xbox. However, as Windows Central reports, gaming wasn't hit the hardest by the layoffs this time.

As is usually the case, Xbox management issued a segment-wide memo telling employees what was happening. In the memo, Xbox boss Phil Spencer said something interesting: "To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft's lead in removing layers of management to increase agility and effectiveness."

The full scope of these layoffs remain unclear, but from Spencer's words, it's possible that mostly management and leadership positions could be affected (this could also be why Jamie Leder is no longer listed as CEO of ZeniMax on LinkedIn).

It's possible that non-games development positions were mostly affected, with marketing and management groups being cut. Remember that both ZeniMax Media and Activision Blizzard King are limited-integration companies at Microsoft, meaning these companies have their own management hierarchies and also manage their own financial book-keeping.

However, there is potential room for speculation as Microsoft has signalled a radical change to Xbox hardware development. From the sound of it, the next generation Xbox console could also be a kind of amalgamation of a Windows PC and a console, and Microsoft gaming president Sarah Bond recently affirmed that the goal is to make "Windows the best place for gaming."

It's unclear which aspects of the Xbox business will slow down or be cut entirely, but we do know that Microsoft has been investing billions of dollars in artificial intelligence, including ChatGPT.

Microsoft has used player input data collected from real-world play sessions to fuel its MUSE generative AI technology, which can create real-time segments of gameplay without having to actually download the game.

Microsoft is also teaming up with Inworld AI to generate quests, dialog, and stories for new video games.

Another part that stood out in the memo was assertions that Xbox will focus on areas with 'the greatest potential,' which could signal a greater emphasis on PC.

"We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business."

In the past, Spencer has frequently said that PC Game Pass is a growth frontier for Xbox. That certainly seems to be the case; last quarter, Microsoft CEO Satya Nadella said that PC Game Pass spending was up 45%.

Then in a recent interview from June, Spencer talked about some of these areas of investment, which have culminated in the first Xbox handheld, the Xbox Ally X (it's really a Windows handheld, though):

We're investing in a new form factor piece of hardware for us with our partners at ASUS, which means on our side, we have a lot of design work that we did with them.

We did a lot of operating system work that continues. These are areas we're investing in.

Microsoft has yet to fully disclose the plans of its next-generation Xbox console, and information on whether or not it will boot up Windows and be the first hybrid PC-console remain speculatory.