This news appears in many financial news sources today

Microsoft cuts 2.1% of employees as Xbox unit plans to spin studios

It looks like MS is focusing on its burgeoning AI businesses while pulling back somewhat from its gaming enterprises. In addition to the job cuts at Xbox, four of its in-house gaming studios are being spun off to become independent entities.

Interesting times ahead for the flight sim community?

Just seen the headline on BBC website and whilst I have zero interest in Xbox as a gaming console my immediate worries are with Xbox Gaming Services which MSFS uses

I wouldn't expect much of an impact on MSFS, since Microsoft doesn't own Asobo, and MSFS/FS24 have sold pretty well, and are clearly drawing players on Xbox.

The Xbox division has been a mess for years, since MS massively overspent buying studios, then couldn't decide what Xbox really was, so the division was barely profitable, and the new Xbox CEO decided on the current bloodbath of layoffs as an attempt to right the ship.

Probably true but no matter. 🫤

dd

Very unfortunate, I'm pretty sure that the division running MSFS will end up taking a hit from all of these corporate decisions

It has already been said but worth repeating - Asobo isn't owned by MS, and MSFS seems to do very well. Layoffs suck, but none of this likely has anything to do with MSFS.

Unfortunately video games are going through some tough times. The problem is, a studio puts out a single player game, it gets reviewed at at 8/10 or so, but it just doesn't sell.

24 minutes ago, Hyno_09 said:

Very unfortunate, I'm pretty sure that the division running MSFS will end up taking a hit from all of these corporate decisions

You mean like what happened the last time there were big layoffs? Spoiler alert! Nothing happened.

While Asobo Studio is an independently owned company, MSFS is entirely dependent on Microsoft's continuing support.

Worst case scenario - Lockheed will purchase the platform again for P3Dv7.0 :-)

"In an email to the division, also published on the Xbox blog, Asha Sharma (Xbox CEO) paints a bleak picture of the Xbox division's state. She argues that the business model is unhealthy, with the company achieving margins three to ten times lower than its competitors and operating with a smaller hardware base and higher costs in the current console generation. Sharma considers the attempt to achieve growth through multi-platform titles and Game Pass to have failed."

It's a little confusing whether Xbox is losing money, or Xbox is losing money. This is why MS should not have named their games division "Xbox."

It would not at all surprise me if the console side is losing money overall. Consoles kind of suck. You pay $650 for a console that's a walled garden, and unlike consoles of old that used instant-load cartridges, modern consoles have load times on par with, or slower than, PCs. If they break, you're often just screwed whereas when a PC breaks, you just replace whatever component died and get on with your life.

And generally if you compare a console game to its PC port, the PC one has better graphics because it's not limited by whatever hardware the console comes with.

Beyond that, MS is still the new kid on the block in the console world. Nintendo and Sony have been making consoles much longer than the Xbox has been around, and Xbox just doesn't have compelling games that you can only play if you have an Xbox. In fact, it's so bad that they list as "exclusives" games like Forza, Redfall and, yes, even MSFS before it launched on PS5 as Xbox exclusives even though you can get them on PC. Not very exclusive.

Back in the day, you bought a Nintendo because you had to have one if you wanted to play Super Mario Brothers. You could not play it on PC and in fact you still can't unless you want to move into illegal emulation territory. There's no such reason to bother buying an Xbox.

For MSFS specifically, I'm not making a disparaging distinction between casual and hardcore simmers here, but in general you're not going to find hardcore simmers on console. That's not to say that casual simmers are "less-than," but it is to say that hardcore simmers are much more likely to be ready to drop a truly stupid amount of money on the hobby, and that points directly at marketplace sales.

About time Microsoft take action to sort out Xboxymess.

On 7/6/2026 at 8:17 PM, G-YMML1 said:

Worst case scenario - Lockheed will purchase the platform again for P3Dv7.0 :-)

That might not be such a bad thing. Lockheed Martin certainly breathed fresh life into FSX.

Console users are a large component of the MSFS user base, therefore much of its success, and continued funding and development, relies on that user base.

If the news is true regarding financial problems with Xbox, I wouldn't be so quick to dismiss it, as it could have a significant adverse impact on MSFS.

Dave

On 7/6/2026 at 4:19 PM, kerosene31 said:

Unfortunately video games are going through some tough times. The problem is, a studio puts out a single player game, it gets reviewed at at 8/10 or so, but it just doesn't sell.

True Asobo is independently owned … but without MS financial support and infrastructure they would never have completed MSFS as we see it today. So yes, not “owned” but extremely reliant on MS when it comes to MSFS (especially their servers and bandwidth).

The problem with high reviews (8/10) is that they are often fake reviews (even the verified purchase … free $0 purchases provide by the vendor) and rarely provide detailed context. The reviews I look at almost exclusively are the negative reviews because an “unhappy” customer is more likely to provide exact details of what made them unhappy … much more valuable information. Of course, some of what makes one buyer unhappy may not be relevant to another or it’s obvious the buyer is “challenged” in some way.

But overall, the gaming industry is taking a big hit from the AI hype and price fixing of RAM and GPUs and other component companies trying to cash in. The priced fixing lawsuits have started so we’ll see if any of these component execs end up in jail like the last time they price fixed. But the sad reality is that a fine of $100M means nothing when your profits have increased by 700% … and not sure how the US could put international company CEOs in jail? Micron maybe, but not the others.

But here is the rub, consumers are buying into the AI hype via DLSS is a good example with fake frames so as to produce higher FPS. Part of the problem is the end users thirst for ridiculously high FPS … a stutter is world ending for those who have not evolved thru the beginning of PC gaming … apparently a huge distraction yet AI aircraft floating around without wheels isn’t? Heck MSFS SU6 hype is DLSS 4.5 support … ugh … just more of the same fake frames and adjusted content that’s not as intended. In many ways, consumers brought this on themselves with buying into DLSS/AI as a solution.

I think MSFS 2024 will be the end of the road for MS/Asobo involvement. But on the positive side, the content providers kept FSX and P3D going for decades after MS closed that shop. Some of the solutions and hacks people came up with to solve FSX/P3D problems was impressive, so if there is no more MSFS 2024 newer version, it will be around for a while (unless of course MS pull the plug on the servers). And there is still the option of XPlane which is making “slow” (ok very slow, ok super slow) progress. So it’s not all bad.

Edited July 8Jul 8 by SayAgain