Microsoft has announced a fresh round of layoffs affecting 4,800 employees across the company, with its Xbox gaming division bearing the brunt of the restructuring as the technology giant seeks to streamline operations and improve returns from its gaming investments.
Among those laid off is Kevin LaChapelle, Vice President and General Manager for Xbox Cloud Gaming (xCloud), whose departure has drawn particular attention after 37 years at Microsoft. LaChapelle played a key role in developing Xbox's Backward Compatibility programme and was considered one of the company's longest-serving gaming executives.
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His exit highlights that the workforce reductions have extended beyond junior employees to include senior leadership.
On LinkedIn, LaChapelle, who led the team that built the Xbox Backward Compatibility programme, wrote about his lay-off: “I will add my name to the list of people who were laid off today at Xbox.”
Beginning his career at Microsoft in 1989 as a software design engineer, he transitioned through various sectors of the business over the following decades. “Sitting in the auditorium when Phil announced the programme at E3 2015 was incredible. The audience's reaction was unbelievable,” he added.
The company is eliminating 1,600 Xbox roles immediately, with plans to cut another 1,600 positions by July 2027, bringing the total reduction in its gaming division to around 3,200 jobs. The layoffs are part of a broader reorganisation aimed at simplifying Xbox's operating structure following years of investment in Game Pass, cloud gaming and multi-platform releases.
The restructuring has also affected multiple Xbox studios and support teams. Bethesda Game Studios confirmed that many developers, including long-serving programmers, artists, designers and quality assurance testers, were among those laid off. Corporate Vice President of Product Services Dave McCarthy is also leaving the company after eight years.
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In an internal email, Xbox CEO Asha Sharma said the company had invested heavily in Game Pass, multi-platform publishing and expanding its content portfolio, but acknowledged that those businesses had not grown at the pace Microsoft had anticipated.
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