After a round of layoffs by Microsoft in early July,Candy CrushdeveloperKingand related teams atXboxhave been notified via an internal memo that their terminated positions will be filled by AI. Approximately 200 roles were affected by theMicrosoftlayoffs, and internal sources are now shedding light on the reasoning behind the cutbacks and the planned implementation of artificial intelligence to replace the axed workers.
The video game industry has witnessed a seemingly relentless string of studio closures, game cancellations, andmassive layoffs at Microsoft, Embracer Group, Sony, and other top companies over the past two years. Many have pointed to corporate bloat and unsustainable business practices as the driving forces behind these repeated workforce and project reductions, and many have remained weary of how studios will re-establish their operations in light of shifting labor forces. It would seem that the fear of AI replacing some of these positions is set to become a reality, with now former King and Xbox developers revealing the systems that are set to fill their prior roles.
According to an internal memo shared withMobile Gamer Biz, King staff were notified that the positions terminated in the early July 2025 layoffs were a result of restructuring that aims to achieve growth while creating a smaller overall team. The memo prioritizes a goal of simplicity aimed at “fewer layers…fewer people in meetings, fewer stakeholders for every project.” Notably, the memo specifically highlights “unlocking many more AI tools” as a way to accomplish this new minimalist business structure. The use ofartificial intelligence in game developmenthas been a hotly contested topic in recent years, and the revelation of hundreds of employees under Microsoft being terminated only to be replaced by AI has left audiences and industry personnel in shock.
Microsoft Layoffs Continue to Spark Skepticism
Anonymous sources speaking to MGB further stated that a number of level designers, user researchers, user experience staff, and narrative writers who were affected by the layoffs had been working on developing these same AI systems to help streamline their work. It would now seem that those AI systems are instead being used to replace the team members, leaving remaining staffers dissatisfied with the company.Microsoft’s continued focus on AIhas been shared publicly, though many had hoped that the use of artificial intelligence in gaming would remain a tool for developers and not a replacement for creatives.
As theMicrosoft layoffs receive criticismand skepticism from both industry veterans and gaming fans, many question where a middle ground can be established that balances the desired success of companies and the necessary health of workforces. It remains unknown exactly how manyKingandXboxemployees will be replaced by AI following the latest Microsoft layoffs, and both remaining staff and weary audiences remain uncertain of how this new system will affect future game development.
