As the new year unfolds, the gaming industry confronts a challenging phase with widespread layoffs, affecting thousands. Microsoft’s gaming division has significantly contributed to this trend by announcing 1,900 job cuts. These layoffs are expected to impact the company’s approach to physical game distribution, signaling a strategic shift within the industry.
Physical Distribution Departments Disbanded
Journalist Jez Corden reports that Microsoft is dismantling the departments responsible for Xbox game distribution in retail stores. While this move does not imply a complete withdrawal from physical media, it suggests a potential pivot towards outsourcing these operations. This development casts doubt on the company’s long-term commitment to physical game distribution.
Microsoft’s Digital-First Strategy
Historically, Microsoft has been an advocate for digital over physical media, as evidenced by its all-digital Xbox Series S console and internal plans for a digital-only Xbox Series X model. This digital-first mindset is further reinforced by the upcoming digital-only release of Senua’s Saga: Hellblade 2, a major first-party title.
Microsoft has not officially commented on the extent to which the layoffs have affected its physical games division. This silence leaves room for speculation regarding the future of physical game releases under the Microsoft brand.
Additionally, the layoffs have led to the cancellation of an unannounced survival game from Blizzard Entertainment. Complications with the development engine are cited as a contributing factor. Blizzard Entertainment’s president Mike Ybarra has also announced his departure from the company amidst these changes.
