Microsoft cuts 4,800 jobs as video game industry crisis deepens

On July 6, 2026, Microsoft revealed plans to eliminate 4,800 positions, with 3,200 of those in its Xbox divisions, as it navigates challenges following the COVID-19 pandemic. The combination of lockdowns and low interest rates had previously facilitated acquisitions, such as Microsoft’s $68.7 billion deal for Activision Blizzard. However, the conclusion of the pandemic, along with the Ukraine conflict, the Gaza crisis, and rising inflation, led to market contraction. In 2023, Embracer Group underwent a restructuring due to nearly $2 billion in debt, resulting in around 8,000 job losses and 80 project cancellations. Since 2022, Ubisoft has also reduced its workforce significantly, leading to strikes in 2026. Sony plans to close multiple studios and cease physical PlayStation disc production by 2028. Analyst Mat Piscatella highlighted a declining audience for premium games, despite 3.6 billion people playing video games worldwide.