The video game industry is undergoing a profound transformation, driven by the growing influence of artificial intelligence (AI) and a wave of layoffs affecting even the biggest players, such as Microsoft. Despite reporting record-breaking revenues, the company’s current strategy has sparked controversy for favoring automation over human talent.
One of the most notable cases is the recent dismissal of 9,000 employees, including developers involved in titles like Perfect Dark and Everwild. According to a former Microsoft developer who spoke anonymously to Endgadget on July 3, the company is seeking to replace as many staff members as possible with AI agents. “Xbox in general feels years behind the curve in game development, leading to a lot of wasted time and effort. They’re doing everything they can to replace as many jobs as possible with AI,” the source claimed.
Microsoft’s commitment to artificial intelligence is not new. In addition to maintaining a dedicated gaming division, the company has become one of the world’s largest investors in AI, with a clear goal of integrating it across all business units, including video game development.
The company has defended its restructuring efforts by stating that the layoffs affect less than 4% of its global workforce and are part of necessary personnel adjustments to remain competitive. However, the numbers tell a different story: in less than two years, Microsoft has let go of nearly 11,600 employees from its gaming division. The figure breaks down into three major rounds: 1,900 in January 2024 (as reported by Expansión), another 650 in September of the same year (confirmed by Reuters), and the most recent 9,000 in mid-2025 (Financial Times).
These decisions have reignited concerns about the company’s internal practices and the future of Xbox. The cancellation of anticipated projects, coupled with mass layoffs and the potential replacement of human workers with AI, paints a troubling picture for the brand’s direction.
