Ubisoft and Xbox both reach for the same lever: cut people to cover a revenue gap

Gaming 3 min 80 sources

Ubisoft is closing two studios and cutting up to 380 jobs while Xbox warns of 'major' July layoffs and a '100-day reset' — two companies bridging a gap between steady spending and income that hasn't arrived.

Key takeaways

Ubisoft is closing its Winnipeg and Belgrade studios and cutting up to 380 jobs, while Xbox warns of "major" layoffs in July and a "100-day reset."
Both companies are bridging the same gap: steady spending on staff and hardware against income that has thinned or slipped — Xbox spent $20 billion over five years as revenue fell.
Nintendo's 87% Japanese sales drop after its Switch 2 price rise shows how fragile the income side is just as costs, including memory chips, are climbing.

The week the gap came due

Two of the biggest names in games reached for the same lever this week, two days apart, for the same reason: money is going out steadily, and money coming in has thinned. The part that flexes to cover the difference is people.

Ubisoft closes two more studios

On Wednesday, Ubisoft confirmed it will shut its Winnipeg and Belgrade studios and reorganise its Barcelona team to work only on Rainbow Six. Up to 380 jobs are at risk across the closures and cuts to its global publishing division [21][28]. Winnipeg opened in 2018 and grew to roughly 100 people; it last helped ship Rainbow Six Mobile. Belgrade had been open a decade and worked on games from Steep to Skull & Bones [23].

This is not a one-off. Ubisoft employed more than 20,000 people in 2023. Before this week’s cuts it was down to 16,590 [21][28]. In March the company ended game development at its Ghost Recon studio Red Storm, cutting about 105 staff [28]. A $1 billion bailout from China’s Tencent — a part-owner that took a stake in a new subsidiary holding Ubisoft’s biggest brands — has not stopped the bleeding [23]. Hours after the studio news, more layoffs were reported at Ubisoft’s San Francisco office [19].

The detail that explains the rest: Ubisoft’s 2026 release slate is thin. A remake of Assassin’s Creed IV: Black Flag arrives in July and a Rayman Legends remake was just announced, but the new Far Cry and Ghost Recon games were pushed to 2027 and beyond to improve their quality before launch [23]. The big games that bring in the money slipped. The salaries did not.

Xbox prepares a “reset”

The same day, Microsoft’s Xbox leadership sent staff a memo warning of an “Xbox reset” over the next 100 days, and Bloomberg reported that “major” layoffs will land shortly after Microsoft’s fiscal year closes on June 30 [29][30]. Rumours of around 1,000 cuts have circulated; the exact number isn’t confirmed [29][30].

The memo put the problem in plain figures. Excluding the Activision Blizzard purchase, Xbox CEO Asha Sharma and content chief Matt Booty wrote, “over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time” [29]. Twenty billion out; revenue down. “Going forward, this cannot continue.”

Xbox also flagged a second squeeze coming: a “hardware component crisis.” Memory chip costs for the 2027 holiday season are expected to run over five times what Microsoft paid two years earlier [29]. Sharma has said openly that millions of players won’t be able to afford a next-gen console without a “radical” change to how consoles are sold [75].

Nintendo’s warning sign

Nintendo offered a preview of what raising prices does to demand. After it lifted the Japanese Switch 2 price from ¥49,980 to ¥59,980 (about $312 to $374) on May 25, weekly hardware sales in Japan fell 87% — from a pre-hike surge above 200,000 units to 31,751 [25]. Some of that is buyers who rushed to beat the increase. But it shows how thin the room is: the income side is fragile exactly when the cost side is rising.

The thread

These look like three stories — a French publisher, an American platform, a Japanese hardware maker. They are one story about timing. Each spends continuously to keep studios staffed and consoles subsidised, and each earns in lumps: a big game ships, a console sells, money arrives. When the lumps slip or shrink while the spending keeps running, a gap opens. Closing it falls first on the people whose cost can be removed fastest. Roughly 380 of them at Ubisoft this week, and likely many more at Xbox next month.

02 · Lesson · why it matters

The gap between when money leaves and when it arrives

Costs run on a steady drip; income arrives in lumps. When a lump is late, something has to bridge the gap — and it's usually the part that's easiest to cut.

This week Ubisoft said it would close two studios and cut up to 380 jobs. Two days later, Xbox warned staff of a “reset” and “major” layoffs coming in July. Different companies, different countries, same week, same move. It’s tempting to read it as two firms each having a bad run. Look closer and it’s one shape, and it isn’t really about good runs or bad ones. It’s about timing.

Two clocks that don’t match

Every company that makes big games runs on two clocks, and they tick at different speeds.

The cost clock ticks steadily. Salaries land every month. A studio’s rent, its software licences, its servers — all of it goes out on a schedule that never pauses to ask how the games are doing. Hundreds of people in Winnipeg and Belgrade were paid in May, and were going to be paid in June, and July, regardless.

The income clock ticks in lumps. A game is in development for three, four, five years, earning nothing. Then it ships, and a wave of money arrives at once. Then quiet again until the next one. The money doesn’t trickle in to match the salaries going out. It comes in a flood, then nothing, then a flood.

A healthy studio works because the floods land often enough to cover the steady drip in between. The trouble starts when a flood is late.

When the lump slips

Ubisoft’s floods slipped. Its new Far Cry and Ghost Recon games — the kind of releases that bring in real money — were pushed to 2027 and beyond. The reasons given were about quality, and may well be sound. But pushing a release doesn’t push the costs with it. The teams still need paying through the empty stretch where the big game used to be.

So a gap opens: months of salaries with no flood to cover them. The company is down to about 16,590 staff, from over 20,000 three years ago, even after a billion-dollar cash injection from Tencent — and still the gap is there.

Xbox said the quiet part in numbers. Over five years, its leaders wrote, they spent more than $20 billion on games, platform, and hardware while annual revenue fell by nearly half a billion. That is the two clocks pulling apart, written as a sentence. Twenty billion went out on the steady drip. The floods didn’t keep up.

Why it lands on people

Here is the part worth slowing down for. When the gap opens, a company looks for what it can change fast. Most of its costs are locked. You can’t un-sign a building lease this quarter. You can’t claw back the years already spent building a game that hasn’t shipped. You can’t make a delayed release arrive early.

But you can remove salaries. A team can be cut in a week, and the saving starts immediately. Of all the costs running on that steady drip, people are the one the company can turn off the fastest. So when the income lump is late and the gap has to be closed now, the gap gets closed there. Not because the work was bad — Winnipeg had just helped ship a game — but because their cost was the one that could be removed in time.

That’s the quiet cruelty of the mismatch. The people cut are rarely the cause of the gap. They’re the part of the budget that moves quickest when something else — a slipped release, a flat year — opens it.

You run on the same two clocks

It’s easy to read this as a story about big companies and their billions. It isn’t only that. The shape lives anywhere costs are steady and income comes in lumps.

A freelancer pays rent every month but gets paid per finished job, and one late client can mean a hard March. A farmer spends all year on seed, fuel, and wages, then earns once at harvest — and a bad harvest is a whole year’s costs against almost no income. A household with a steady mortgage and a bonus-heavy salary feels it when the bonus is the part that didn’t come. The drip never pauses; the lump is the thing that’s allowed to be late.

Seeing it this way doesn’t make the next layoff fair, and it isn’t meant to. It’s meant to show that the gap is structural — built into the difference between two clocks — not a verdict on whoever happened to be standing in it. And it’s worth holding loosely how much any one seat can see of those two clocks. The person being cut rarely knew the flood was slipping; the person doing the cutting may not have chosen the delay. Most of us are somewhere on a drip we didn’t set, waiting on a lump we don’t control, and the gap, when it opens, has to be paid by someone — usually the part that moves the fastest, which is rarely the part that opened it.

03 · Lab · your turn

Mind the Gap

Run a studio across the stretch between steady spending and a lump of income, and feel why a slipped release forces layoffs.