With potential job cuts and studio shutdowns coming to Xbox in July, ex-PlayStation executive Shawn Layden thinks Microsoft is misinterpreting key aspects of the video game business.
I was reading a really interesting discussion on LinkedIn, and it got me thinking about Xbox. It started with a post by an industry guy named Tadhg Kelly, who pointed out that Xbox seems to be struggling with figuring out what it is right now. He thinks things might actually get harder for them, and he listed a few reasons why – like the changes in leadership, the fact that their recent rebrand didn’t feel that different, and this idea that they’re saying Project Helix will cost a lot, but also that hardware can’t be expensive if they want to succeed. It’s a tough spot for them, according to him.
Layden responded to Kelly’s post by saying that these decisions seem to show a lack of understanding of the gaming industry. He added, “Those who understand, understand, and those who don’t, don’t,” implying it’s an obvious issue for people familiar with the field.
Kelly criticized Xbox’s recent announcements, pointing out how they often create more problems than solutions. For example, Xbox showcased new games at a recent event, even though the studios developing those games were already facing closure. Reports suggest this happened with the reveal of Senua by Ninja Theory.
Layoffs and closures are expected at several Xbox game development studios in addition to those previously announced. This includes Double Fine, known for Kiln and Keeper, as well as Compulsion Games, the team behind South of Midnight. Reports suggest these studios are negotiating with Microsoft to potentially become independent rather than shutting down completely.
These changes probably reflect Xbox CEO Asha Sharma’s strategy for strengthening the company’s performance. Sharma and CCO Matt Booty recently discussed the challenges the company is facing, including a 3% decrease in profits this year.
We expect to finish the year with an accountability margin of around 3%, which is lower than last year. Over the past five years, we’ve invested more than $20 billion in our content, platform, and hardware, but our yearly revenue has decreased by almost $500 million. This trend isn’t sustainable and needs to change.
Xbox has been struggling with hardware production, particularly due to recent increases in the cost of components. This has made it difficult for them to produce enough consoles to keep up with customer demand, and the cost of their Project Helix initiative is also a concern. To address these challenges, Xbox plans to explore new business strategies and partnerships related to hardware, while still moving forward with Helix.
Another report suggests that game developers owned by publishers – not just those at Xbox – will also struggle. It predicts Microsoft’s actions are only the first sign of widespread difficulties within the industry.
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2026-06-17 20:12