Do the big Xbox layoffs mean that they're done with mobile?

• The latest round of layoffs looks set to hit Microsoft's Xbox hardest
• But what does it mean for them on mobile? A lot more pressure to perform
• King and Mojang are now firmly under CEO Asha Sharma's thumb

Over the past few days, we’ve had yet another round of, yep, you guessed it, layoffs. But this time, rather than affecting just a handful of individual studios, it’s gaming giant Xbox that has axed over 3,200 staff and announced plans to sever ties with five studios.

And it’s not just console and PC seeing cuts; both King and Mojang are also set to be trimmed, although it’s not clear how many jobs specifically will be lost. But either way, it’s bad news for so many developers who’ve pinned their hopes on the stability of Microsoft to carry them through tough times for the industry.

You won’t be surprised to learn that I have some thoughts on this…

The big cuts

First and foremost, these cuts are part of an increasingly worrying trend amongst studios ever since the gaming industry saw explosive growth during the Covid pandemic. And while some developers and publishers could argue this is part of a natural correction, in the case of Xbox, it’s a lot more unnerving given their size and seeming inviolability.

I don’t doubt that Xbox’s mobile ambitions are still ironclad. After all, our humble platform keeps growing in terms of users year on year and is probably the most accessible platform worldwide. However, that doesn’t mean that they’ll actually be able to follow through with those plans.

Right now, the main pillars of mobile for Xbox are King (the creators of Candy Crush Saga) and Minecraft developer Mojang. King has the puzzle market practically cornered, and Minecraft is a landmark in gaming that stretches beyond the confines of console, mobile or PC, and even into the realms of pop culture with its own film series.

For context, Candy Crush Saga has (according to AppMagic) raked in over $8 billion in terms of revenue, and nearly one and a half billion downloads. Minecraft has over 473 million downloads and over a billion in revenue as well, just on mobile. And while we can never be sure of the exact numbers, if they're even in the same ballpark, I know of many developers who'd kill for this kind of success.

Both of these studios do have one key weakness, though: they’re focused on a single niche. For King, it’s puzzlers, and for Mojang, it’s a single game. And in the years since being acquired by Microsoft, neither has really made their mark elsewhere. Mojang’s Scrolls barely cracked 100k downloads when it hit mobile, and King’s only other megahit has been Candy Crush Soda Saga with nearly $3 billion in revenue and 500 million downloads.

And while King continues to be successful, competition in the puzzle genre is only increasing. Scopely’s Monopoly Go has seen explosive popularity, and with massive production values to boot, including collaborations with huge names in pop culture such as The Simpsons and Star Wars. 

For another bit of rather chilling context: Monopoly Go has hit $6 billion in only three years, compared to more than ten for King to hit the $8 billion mark. This does not bode well for everyone’s favourite litigious studio. It means that Scopely are on track to overtake them in that key metric, and specifically the one thing that corporations care about, which is money.

Basically, the two strongholds of mobile Microsoft-slash-Xbox are in danger of growing stale. And, with these cuts, it leaves precious little in the way of spare resources for new and bold manoeuvres. The news that Mojang and King will report directly to Xbox CEO Asha Sharma should be encouraging, but it means the pressure is on to perform against Microsoft’s often excessive expectations.

Short of a grandiose new IP, I’m afraid all we’ll see is more attempts to squeeze an already cash-strapped fanbase for more money. And that can’t be good news for anyone, least of all the players.

What about Game Pass?

The only dark horse in this race is Xbox Game Pass. Allowing you to play console and PC games on your phone with a single subscription should be a winning formula. However, the value proposition is one thing; for publishers and developers, it’s another entirely. We’ve already seen devs raising concerns about how day-one Game Pass drops cut into their bottom line, and like any streaming service, the prices can only go up.

And Game Pass also has a key weakness: you don’t actually ‘have’ the games. In both an ownership and gameplay sense, you don’t actually have them in your library and can’t play many of them without a connection. With PlayStation's announcement that they're ditching physical disks being met with huge backlash, it seems that the digital-only future is far from being embraced with open arms, something Game Pass will likely struggle with.

So the more that Game Pass grapples with subscription fees, when and how to add games to its catalogue, the more appealing the increasingly large-scale, ambitious mobile games like Arknights: Endfield, Silver Palace or MiHoYo’s catalogue will become. They suffer many of the same issues of being 'digital-only', yes, but long-term support is practically baked into their business model, so people will be more confident in them.

No good news

I think it’s fair to say that this latest round of layoffs was not unexpected but is increasingly less welcome. Xbox wants to be a major force in gaming, but doesn’t want to keep a large development staff. And the ‘but AI’ argument likely to float around soon increasingly smacks of ‘the blockchain’ or ‘the metaverse’ as a proposed miracle cure for all the industry’s ills.

As I already pointed out, Mojang and King are still titans of gaming, but their heyday may be done. Minecraft can only be monetised so much, and King has more challengers than ever for the puzzle genre. If there's anything we've seen as well, it's that being under a CEO's scrutinous gaze can be more of a hindrance than a help.

Put it this way, I feel that Xbox is, if not backing away from mobile, leaning far too heavily on existing success stories from years prior, not cultivating new studios that could potentially deliver the next big thing. And for a massive corporation with theoretically limitless resources to not go all-in on gathering exciting new ideas for one of the most widespread platforms on the planet? It makes me see this more as a retreat than a reorganisation.