Rumors of large-scale layoffs in Microsoft's gaming division, which first surfaced last spring on the workplace community app Blind, have become reality. Various foreign media outlets, including Business Insider (BI), reported on the 1st (local time), citing sources, that Microsoft plans to begin layoffs as early as next week.

The scale of the layoffs is less than 2.5% of the total workforce. Based on Microsoft's headcount of around 220,000, this amounts to several thousand employees, with the cuts affecting the sales and consulting divisions as well as the Xbox gaming division. While the direction aligns with rumors previously posted on Blind regarding a 15% reduction in the gaming division to be announced in May or June, the figures were exaggerated. The actual announcement is now set for early July, immediately following the close of the fiscal year on June 30, rather than in May or June.

The gaming division is at the center of these layoffs due to poor performance. Gaming revenue for the most recent quarter fell 7% year-over-year to $5.3 billion, with hardware sales in particular plummeting by 33%. Over the past five years, Microsoft has poured more than $20 billion into content, platforms, and hardware support, yet annual revenue has actually decreased by nearly $500 million during the same period. This is why new Gaming CEO Asha Sharma stated in a memo to employees that the current business structure is "unsustainable."

The groundwork for these layoffs had already been laid on several occasions. Microsoft raised console prices globally, citing rising component costs, and reportedly even considered spinning off subsidiary studios such as Compulsion Games, Double Fine, and Ninja Theory. Last year, the company cut 6k jobs in May and 9k in July (approximately 4% of its total workforce), and earlier this year, it introduced its first voluntary early retirement program in the company's history. It is reported that about one-third of the 9k eligible employees accepted the offer.