Microsoft Cuts 5,000 Jobs, Entertainment Division Might Be Affected

While in 2008 the worldwide recession appeared to spare the gaming industry, it seems that things aren't going so well this year, as a lot of big and small companies are announcing drastic layoffs and severe cost-cutting measures in order to ensure a high profit and to keep from going bankrupt.

While it was only natural for small, independent studios like Factor 5 or Free Radical to be shut down, seeing big companies like Sony, Electronic Arts or Microsoft affected so hard by the financial crisis is a bit shocking. While the first two already announced the decision to cut jobs and reduce costs, there was only speculation about the Redmond-based software giant. But it now seems that Steve Ballmer, the CEO of Microsoft, has confirmed that in excess of 5,000 jobs will be cut in the next 18 months from various divisions of the big company.

“While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach,” Ballmer said. “We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today.”

The first step was to cut 1,400 jobs yesterday, a drastic measure that, as some sources speculate, has affected the entertainment and devices division which the Xbox 360 department is part of. This branch handles a lot of important things besides the gaming consoles, like the Zune media player development and the Windows Mobile engineering division. Other sources have already confirmed that the ACES studio, famous for creating the Microsoft Flight Simulator franchise, has been gravely affected by the layoffs and that the team in charge of the Flight Simulator series has been completely dismantled.

Other targets of the layoffs include the Research and Development, Marketing, Sales, Finance and Human Resources divisions. Although we hope that there won't be further layoffs, the company still plans to terminate 3,600 contracts in the future.