The CEO of Microsoft's games arm, Phil Spencer, has said that the industry's abundant layoffs are related to market contraction.

Speaking to Polygon, the Xbox boss said that he is "concerned" by a lack of growth in the industry, something that clashes with shareholder demands for perpetual growth. To date, around 8,000 jobs have been cut around the world in 2024, closing in on the 10,000-plus redundancies that took place the previous year.

"I’ll say the thing that has me most concerned for the industry is the lack of growth," Spencer said. "And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth — because why else does somebody own a share of someone’s stock if it’s not going to grow? — the side of the business that then gets scrutinised is the cost side. Because if you’re not going to grow the revenue side, then the cost side becomes challenged."

He continued: “We’re a business. I’ve said over and over. I don’t get any luxury of not having to run a profitable growing business inside of Microsoft. And we are that today. But just across the industry — you mentioned it, and in sitting here at GDC, I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don’t want this industry to be a place where people can’t, with confidence, build a career. So that’s why I keep pivoting back to: How does this industry get back to growth? But to your question, for us as Xbox or any of the teams that are out there, it is really an outcome of an industry that’s not growing. It can grow and it will grow again. But you see this time right now and the implications have human impact. And we should all reflect on that and think about it.”

Microsoft laid off 1,900 people from its games business in January.