In an internal memo sent to staff, it has been announced that the 200 developers who were laid off at King/Xbox earlier this month will be replaced by AI.
The internal memo provided to Mobile Gamer Biz addressed the question of why people at the company were laid off.
The email reads:
“Why is this happening?“
“The industry is changing fast, and our business has not been growing.
When that happens, we must not only look outside, at competitors and the market, but also inside.
As we’ve talked about before, we are making several changes to get the business back to growth. Unlocking many more Al tools is one recent example. Investing more in marketing this year is another.
We’re fortunate to have many talented individuals at King. But we also have a collective problem: the size and structure of the company often makes it difficult to get things done.
So we plan to simplify the organization – fewer layers, fewer overlapping remits, fewer hours spent on alignment, fewer people in meetings, fewer stakeholders for every project.
Many leaders across King have been asked to redesign their organizations to be smaller overall.
There will be some new roles created in these redesigns, and some rebalancing of headcount across King. But overall King will be a smaller company.”
Mobile Gamer continues to say that the staff let go will be “replaced by the AI tools they built and trained”. These employees include level designers and copywriters.
RELATED – Microsoft Layoffs Explained—All Xbox July 2025 Layoffs and Cancelled Games
According to various sources, around 9000 jobs were affected in the recent Microsoft layoffs, which were the 4th round of layoffs in the past 18 months. This round saw potentially thousands of jobs affected at Xbox’s gaming division, with several projects closing down and one studio, The Initiative, closing down.
In an internal email to staff, Xbox CEO Phil Spencer praised his teams for having “more players, games, and gaming hours than ever before,” but noted that shuttering teams and projects was necessary to “increase agility and effectiveness.”
According to Insider Gaming sources, those within Xbox believe that this is only the beginning of a process that will result in numerous restructurings and layoffs across its studios.
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Tom Henderson is Insider Gaming's Co-Founder and Editor-In-Chief. When he's not running one of the industry's leading independent video game websites, he's probably playing an FPS like Call of Duty,…
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