Xbox is cutting contracts with external vendors as part of broader cost-saving operations, ahead of an anticipated wave of mass layoffs of its full-time, internal employees, as well as plans to spin-off various first-party game studios.
Kotaku has now heard from several individuals involved in contracting with Xbox for different types of services who have reported that Xbox is ending their roles as it heads into the new fiscal year. One source told Kotaku that some contractors who were involved in supporting various aspects of Xbox’s big summer showcase in June have already been informed that their roles were cut from next year’s fiscal budget.
The company’s fiscal year ends today, June 30, with mass layoffs impacting full-time staff expected to roll out in the weeks ahead. Earlier this month, employees at Compulsion Games were told that their studio was in trouble and that negotiations with leadership were underway to facilitate a sale or buyout that would salvage it in some way. Similar negotiations are reportedly underway at Double Fine and Ninja Theory.
Information around the wider changes at and around Xbox remains murky. Yesterday, a rumor suggested that Undead Labs, maker of the State of Decay zombie games, could also be at risk, though Kotaku has been unable to corroborate that claim. This led some to wonder if the studio has recently been sharing more footage of its long-in-development sequel, State of Decay 3, in order to raise outside investor interest.
Also yesterday, it was reported that Xbox’s main PR agency, Assembly, underwent layoffs that included at least one person working on the Xbox account. However, it was later clarified that these layoffs were part of an agency-wide reorganization at Assembly and were not connected to what’s happening at Xbox.
Meanwhile, employees at other, much larger studios such as Activision Blizzard and Zenimax remain in the dark as to if, or how badly, their own groups will be impacted, and Xbox’s unionized workers are bracing for negotiations. If and when official information around these layoffs is shared, it will almost certainly not capture those individuals impacted by contract termination who will see what was once regular, steady work disappear.
Additional reporting by Ethan Gach