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Friday, August 20, 2004 - Page updated at 08:29 P.M.
Microsoft laying off 76, cuts production of own Xbox games
By Brier Dudley
The cut is the division's largest single layoff since Microsoft launched Xbox in 2001, but it has shed hundreds of games jobs over the past year.
A Microsoft spokeswoman said the company no longer has to make as many Xbox games itself, now that the console has support from the games industry.
"The business has grown and a vibrant ecosystem of third-party developers has emerged," said spokeswoman Molly O'Donnell. "These developers are filling the pipeline with an abundance of great games."
Microsoft's game-development group, which started out making games for PCs, grew from 350 employees to a peak of 1,200 after the Xbox was launched.
Changes were under way earlier this year and the group was down to 1,000, division chief Robbie Bach said in May.
"When we got to that point, we started looking around and started realizing, wait, we've got tons of third-party support," he said. "We shouldn't be the bulk game provider."
There were other hints about the sports game studio's future. Microsoft announced in March that it would not produce any new editions of its sports titles this fall. Then in May it formed a partnership with Electronic Arts under which the game company is producing about 15 Xbox titles.
Microsoft is also refining its Xbox business to make it profitable. Last month, executives told financial analysts that its entertainment business is on track to be profitable by the 2007 fiscal year.
The sports game studio being cut produced titles such as "NFL Fever," "NHL Rivals" and the "Inside Drive" baseball game.
O'Donnell said the 76 employees being laid off were notified verbally starting Wednesday. Their jobs end Oct. 25. Job specialists are helping them look for work elsewhere in the company.
Brier Dudley: 206-515-5687 or firstname.lastname@example.org
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