A former Xbox star just explained why his old colleagues are losing their jobs — Game Pass

Gaming 4 min 80 sources

The man who built Forza Horizon 5 says the layoffs sweeping Xbox trace back to one thing: not enough people subscribed to Game Pass at the price it needed. It's the clearest public post-mortem yet on gaming's biggest subscription bet.

Key takeaways

A former Forza Horizon 5 director publicly blamed Xbox's ~3,200 layoffs on Game Pass failing to sign up enough subscribers at the price it needed to cover its costs.
A subscription bets that a large crowd paying a flat fee beats selling each game once — and when the crowd falls short, the gap gets closed by cutting the studios that make the games.
The same week, GTA 6's ~$260m first-week pre-orders showed the opposite model thriving, while Netflix chased the very subscription dream Microsoft is now pulling back from.

The subscription bet comes due

This week a former Xbox creative director sat down on a podcast and named, plainly, why his old colleagues are losing their jobs. Mike Brown was creative director on Forza Horizon 5, one of Xbox’s biggest hits, before leaving developer Playground to found his own studio [9][25]. His diagnosis of the current bloodletting: Game Pass never signed up enough people at the prices it needed to work [9].

The scale of the cuts is set. Xbox CEO Asha Sharma has already removed about 1,600 jobs and plans another 1,600 by the end of the financial year — roughly 3,200 people [25][76]. Four studios are confirmed to be leaving Microsoft ownership, with a fifth on the way [25]. Sharma has called it the most significant restructure in Xbox history and said, flatly, that Microsoft’s gaming business “is not healthy” [25].

Here is the mechanism Brown pointed at. Game Pass is a subscription — pay a monthly fee, play a large library at no extra cost. For that to pay, the flat monthly fees from a huge crowd have to beat what those same games would have earned sold one at a time. Microsoft bet enormous sums that the crowd would show up: it funded studios, greenlit games, and spent $69 billion buying Call of Duty maker Activision Blizzard to stock the library [25]. “The reality is not enough people have subscribed to it at the prices that they needed to pay in order to make that business viable,” Brown said [25]. So the gap between what the library costs and what subscribers pay is now being closed the only way left — by cutting the people who make the games.

Brown was careful to defend the idea. Game Pass, he said, funded games and jobs that would not otherwise have existed [25]. That is the honest tension: the same bet that created work is now destroying it. Xbox’s own leadership is quietly conceding the strategy shifted too far. Chief strategy officer Matthew Ball, defending a return to console exclusives, put it bluntly: “There has to be a reason for people to buy an Xbox” [38]. A platform that spent years telling players they didn’t need the box is now scrambling to give them a reason to buy one.

The other bet, in the same week

While the subscription model wobbled, its opposite posted enormous numbers. Grand Theft Auto 6 pulled in an estimated $260 million in digital pre-orders in a single late-June week, with data firm Newzoo tracking $180 million across the US and five European markets [6]. The game launches in November at $79.99, digital-only, and Newzoo forecasts a launch-week haul of $3.3 billion to $5.2 billion — roughly 51 million copies [6].

That is the blockbuster model in one line: one game, sold once, at full price, to tens of millions. It is the mirror image of Game Pass. The subscription spreads many games across a flat monthly fee and bets on volume; the blockbuster concentrates everything into a single title sold outright. Both are visible in gaming this same week — one straining, one soaring. The industry is being pulled between them.

The human cost of the reset

Behind the strategy sits a week of real job losses. Accounts of the Xbox cuts describe developers at Bethesda, ZeniMax Online, and id Software learning their roles were gone in brief video calls with chat disabled and microphones muted — the fifth round of mass layoffs at Xbox since 2023 [76]. Workers called the process “bizarrely self-defeating and needlessly cruel” [76].

The contraction is wider than Microsoft. A French court ordered Midgar Studio — maker of Edge of Eternity, in business for 18 years — to liquidate after it failed to find a buyer [8]. Splitgate developer 1047 Games cut staff again barely a month after releasing its latest game [16]. Disco Elysium studio ZA/UM laid off 32 workers just after shipping a new title [32]. These are not one company’s problem; they are a business model in flux landing on the people who build the games.

Everyone still believes in the buffet

The strangest coda: even as Game Pass’s biggest backer pulls back, others are placing the same bet. Netflix told investors its games business is up 600%, led by cloud games streamed to TVs, though the company admits it is “still early days” [1]. Games remain a rounding error inside Netflix, and its wider earnings forecast fell short of Wall Street, sending shares lower [22]. But the logic is identical to Game Pass — bundle games into a subscription people already pay for, and hope they stick around longer for it.

The bet on the buffet is not dead. It has simply run into the arithmetic that decides whether any subscription works: enough people, paying enough, to cover what fills the shelves. When that sum doesn’t close, the shortfall has to land somewhere. This month, it landed on the people who make the games.

02 · Lesson · why it matters

You can't sell a thing and give it away at the same time

An all-you-can-eat deal is a bet that a huge crowd makes up for the low price — and when the crowd falls short, the people who cooked the food pay the difference.

A man explaining why his friends lost their jobs

A former Xbox director went on a podcast this week to answer a hard question: why is his old team being cut? He had built one of Xbox’s biggest games. He did not blame greed or bad luck. He pointed at a single number — not enough people subscribed to Game Pass at the price it needed. Everything else, he said, followed from that. It is a rare thing to watch someone trace a wave of layoffs back to one line of arithmetic, in public, with no villain in it.

What the deal is really betting

Game Pass is simple to a player. Pay a monthly fee, play a big library. But under the simplicity is a wager. For a subscription to pay, the flat fees from a large crowd must beat what those same games would have earned sold one at a time, at full price. That “must beat” is the whole business. Microsoft bet enormous money that the crowd would show up — it bought studios, funded games, and spent tens of billions on a single publisher to stock the shelves. The bet was not reckless. It was a real vision. It just had to be right about how many people would subscribe, and at what price.

The free door drains the paying one

Here is the part that hides in plain sight. Every game you add to the buffet is a game a player no longer buys at full price. You are competing with yourself. That is fine — as long as the subscription crowd is bigger than the sales you gave up. The entire model balances on that one “as long as.” Give away too much to too few, and the flat fees can’t cover what the shelves cost to fill. The generosity players love and the losses the company fears are the same act, seen from two ends.

When the sum won’t close, only two levers remain

Say the bet doesn’t close — the fees don’t cover the library. There are exactly two things you can pull. Raise the price, and players leave; past a point, fewer subscribers paying more brings in less, not more. Or fund fewer games, and the library shrinks. “Fund fewer games” is a clean phrase for a hard fact: each game is a team of people. So the gap between what the buffet costs and what the crowd pays does not vanish. It travels down to whoever makes the thing. That is the wave of layoffs, in one sentence.

Who is standing inside this

It is tempting to watch this from outside, as a story about a giant company’s spreadsheet. But the reader who subscribes is inside it. Getting thirty games for the price of half of one is the good side of the bet. And that same low price is part of what the developer’s paycheck had to absorb. Cheap-for-you and cut-for-them are not two stories. They are one number read from opposite ends of the same table. The platform sees it too. After years of telling players they never needed the console, its own leaders now say, out loud, that there has to be a reason to buy the box. The company that gave everything away is asking, late, what it has left to sell.

The generosity was always a wager

Step back and the shape is clear. “Everything for one low price” looked like a gift. It was a bet dressed as a gift. And the bet quietly moved the risk. A studio putting its game on the subscription traded a shot at a big payday for a guaranteed smaller cheque; the platform carried the volume risk in exchange. While subscribers poured in, everyone won. When they didn’t, the risk snapped back onto the studios — the ones with the least power to refuse the deal in the first place. Both things are true at once, and a whole picture has to hold both. The subscription genuinely funded games that would not otherwise exist. It also built a structure whose failure mode is exactly this.

The odd thing is that the bet is not even out of fashion. As its biggest backer pulls away, others line up to make it. A streaming company now bundles games into a subscription people already pay for, hoping they stay. The idea keeps its shine because from any one seat it looks generous, or clever, or safe. No seat sees the whole ledger. The happy subscriber sees a bargain. The executive sees a growth story. The laid-off developer sees the bill. They are all looking at the same table, and none of them can see all of it at once. That is worth carrying past this week: when a deal feels too generous to question, the question isn’t whether someone pays for it. It’s who, and how far down the line they sit from the person enjoying it.

03 · Lab · your turn

Run the Buffet

Set a game subscription's price and library, and feel why the generous deal loses money while closing the gap means cutting the studios.

04 · Hope · carry this

A business model can fail without the talent failing. The people cut this month built worlds that millions lived in, and that skill doesn't disappear — it scatters and starts again, the way the director who diagnosed this week's failure had already left to build a studio of his own.