Setbacks come to Microsoft as 18,000 employees are being laid off while Phil Spencer shocked us all by announcing the closing of Xbox Entertainment Studios.

Microsoft CEO Satya Nadella has announced that major changes are happening at the House of M, resulting in some massive cutbacks. Unfortunately, these changes include Microsoft's plans to lay off 18,000 employees over the next year. The CEO said that most of these reductions in staffing will happen in its Nokia Devices and Services departments, which will account for roughly 12,500 of those laid off, including professional and factory workers.

Most of these lay offs, roughly the first 13,000, will happen over the next six months. Nadella claims that Microsoft needs to lessen its forces for the sake of moving faster and developing tighter relationships between its various branches and product teams. He also mentions that the leftover Nokia Devices and Services team members will be disseminated into various branches of the company in order to focus on changing the Nokia X line to Windows-based Lumia tablets and smartphones. Unfortunately, there was no mention of Xbox or Microsoft Studios by Nadella.

In regards to how these layoffs and cutbacks will affect its game development branches, Microsoft will be closing Xbox Entertainment Studios over the next few months, Polygon reports. This means that the door will be shut on the upcoming wave of Xbox-exclusive television programming. Game Informer has confirmed this news with an official statement by the head of Xbox and Microsoft Studios, Phil Spencer.

"As part of the planned reduction to our overall workforce announced today and in light of our organization’s mission, we plan to streamline a handful of portfolio and engineering development efforts across Xbox," Spencer said. "One such plan is that, in the coming months, we expect to close Xbox Entertainment Studios. I would like to take this opportunity to recognize the accomplishments from the entire team in XES."

This will vastly reduce all of Xbox's planned TV programming, leaving only the bigger projects that are already deep in development, such as Ridley Scott's 'Halo: Nightfall,' Steven Spielberg's Halo series and 'Signal to Noise,' an Atari documentary that will focus on the excavation of a New Mexico landfill containing a cache of discarded E.T.the Extra-Terrestrial cartridges, which took place this past spring. Spencer mentioned that Xbox's apps, its NFL partnership and the Xbox One's cable television support will be unaffected by Xbox Entertainment Studios' closing.

Spencer's announcement concluded with both gratitude and sadness for his lost employees and optimism for those who remain:

Change is never easy, but I believe the changes announced today help us better align with our long-term goals. We have an incredible opportunity ahead of us to define what the next generation of gaming looks like for the growing Xbox community. I have a great deal of confidence in this team and know that with clarity of focus on our mission and our customers we can accomplish great things together. We already have.

Thank you again for all you do for Xbox.

The only series that Xbox Entertainment Studios had aired so far was  'Every Street United,' which was a documentary revolving around street soccer matches and the recent World Cup. Only five out of eight episodes have aired so far, with the final episode still scheduled for a release on August 3. We have a feeling that viewership numbers for this series were a lot lower than Microsoft were hoping, especially considering that most people have been simply watching the World Cup on cable.

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