Despite record-breaking revenues, Microsoft has shifted its priorities: 15,000 employees will be laid off by 2025 so the tech giant can pour more money than ever before into artificial intelligence. Xbox is feeling the impact, with studio closures and game cancellations marking the company’s massive reorganization.

The world’s biggest tech companies—including Microsoft—are quickly realizing that artificial intelligence can automate huge swaths of work in the future. That’s why Redmond is investing in AI more aggressively than ever, even after a historic year for revenues in 2024. But there’s a price: in the past few weeks alone, 15,000 employees have been laid off, even as Microsoft reported its largest annual turnover ever.

These cuts have hit Xbox hard, leading to studio shutdowns and the cancellation of multiple titles. So far in 2024, 15,000 workers have lost their jobs in various divisions—and one key reason Microsoft is downsizing during such a record year is to free up resources for a massive push into AI infrastructure. A report from the Seattle Times confirms this strategy and even reveals just how much Microsoft is prepared to spend in this space.

AI Is Now the Top Priority

Microsoft’s drive for AI isn’t about directly swapping employees for algorithms, but about trimming costs everywhere possible to fund the enormous expansion of its infrastructure. Reports say the company plans to pour $80 billion into AI in the next fiscal year—an increase of $25 billion over last year. The layoffs have begun, and the focus has shifted dramatically.

Mat Piscatella, CEO of Circana, reflected on the subject and its impact on gaming in a recent LinkedIn post. “People keep asking me, ‘What does this mean for games?’ It’s tough to answer. The players are there. The engagement is there. The revenues are there. This is not a demand problem. What’s really shocking—and what makes you throw your hands up—is that the cuts were made primarily to help finance the construction of AI infrastructure.”

“There’s no clear logic here about what it means for gaming. This is something else. Maybe the reports are wrong. Maybe this wasn’t the main reason. Either way, it’s hard not to despair for the industry. But the players and the demand are still there. People love video games, and there are billions of gamers worldwide,” Piscatella concludes, reporting on the U.S. sales market.

Source: 3djuegos