Matt Booty Reassures Xbox Staff: No Layoffs After Big Shakeup

Hours after Microsoft announced the retirement of Phil Spencer, the appointment of AI executive Asha Sharma as his replacement, and the resignation of Xbox President Sarah Bond, the gaming industry's attention turned to a familiar worry: layoffs.

Matt Booty, the newly promoted executive vice president and chief content officer of Microsoft Gaming, moved to quiet that concern in a memo to staff. "My focus is on supporting the teams and leaders we have in place and creating the conditions for them to do their best work," he wrote. "To be clear, there are no organizational changes underway for our studios."

Why Xbox Employees and the Gaming Industry Were Bracing for Layoffs

The anxiety was not unfounded. Microsoft has cut thousands of gaming jobs since completing its $69 billion acquisition of Activision Blizzard in October 2023. Entire studios have been shut down, including Arkane Austin, Tango Gameworks, and Alpha Dog Games. Bobby Kotick, then the chief executive of Activision Blizzard, had told employees the deal "will benefit consumers and workers." Within months, the layoffs began.

That history explains why the word "layoffs" did not actually need to appear in any of the memos published Friday for it to dominate the conversation. Spencer, Sharma, Bond, and Nadella all avoided it. Booty chose the phrase "no organizational changes."

Booty went further, expressing confidence in the division's near-term direction. "We have good reasons to believe in what's ahead," he wrote in Microsoft's official blog. "This organization and its franchises have navigated change for decades, and our strength comes from teams who know how to adapt and keep delivering. That confidence is grounded in a strong pipeline of established franchises, new bets we believe in, and clear player demand for what we are building."

Matt Booty's Role as Xbox Chief Content Officer Under Asha Sharma

Booty now oversees a portfolio of nearly 40 studios spanning Xbox Game Studios, Bethesda, Activision Blizzard, and King, reporting directly to Sharma. The arrangement splits Microsoft Gaming's leadership into two lanes: Sharma handles platform strategy, distribution, and the business model, while Booty manages the people who actually make the games.

It is a structure that, on paper, protects the creative side of Xbox from being reshaped by an incoming chief executive with no gaming background. Sharma has already pledged not to flood Xbox with "soulless AI slop," and Booty's memo reinforced that message by focusing entirely on studio support rather than efficiency targets or restructuring language.

Can Microsoft's No-Layoff Promise Hold After Years of Gaming Job Cuts?

Whether the reassurance holds beyond the transition period is another question. New leadership brings new priorities, and Sharma's mandate to expand Xbox across mobile, cloud, and multi-platform distribution could eventually require the kind of organizational shifts that affect headcount. Microsoft's gaming division is also under financial pressure: gaming revenue fell 9% year-over-year in the most recent quarter, with hardware revenue down 32%.

For the moment, though, the roughly 40 studios and thousands of developers who make up Microsoft Gaming have been told their jobs are safe. In an industry that has endured two years of relentless cuts, that counts for something, even if nobody is ready to take it as a permanent guarantee.