The key figure behind Xbox’s backwards compatibility and cloud gaming features has been laid off after 37 years at Microsoft.
Xbox’s recently announced plans to cut 3,200 staff members over the course of this financial year has already impacted the majority of their development studios.
The affected developers include Compulsion Games and Double Fine, which have severed ties with Xbox and regained their independence, while Ninja Theory and Undead Labs are being sold off. Arkane Lyon, meanwhile, is reviewing its ‘potential strategic options’.
According to reports, Doom’s id Software and ZeniMax Online Studios have also been badly affected by cuts, along with Bethesda Game Studios.
Beyond developers, veteran executives at Xbox have also been let go, including Microsoft’s vice president of Xbox Platform, Kevin LaChapelle.
As noted in a LinkedIn post on Tuesday, July 7 LaChapelle was responsible for leading the team behind Xbox’s backward compatibility initiative, which for years has been one of the most important selling points for Xbox.
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‘I will add my name to the list of people who were laid off today at Xbox,’ LaChapelle wrote on LinkedIn. ‘This ends my 37 years at Microsoft. I have worked in many different parts of the company, and I will say my fondest memories are of leading the team of very talented engineers who built the Xbox backward compatibility program.
‘Sitting in the auditorium when Phil [Spencer] announced the program at E3 2015 was incredible. The audience’s reaction was unbelievable. I followed that with leading the team who created our Cloud Gaming product.’
He added: ‘I am a firm believer that all entertainment will eventually become streamlined to you wherever you are. I look forward to watching how Xbox evolves going forward and I wish the team nothing but success.’
Before he worked for Xbox, LaChappelle led development on various Microsoft applications, including Windows Movie Maker in 2000.
While we know 3,200 people will be affected by Xbox layoffs over the coming months, the exact studios and people impacted is still not entirely clear. Kotaku reports that ‘roughly’ 25% of Obisidian Entertainment, the studio behind Pentiment and The Outer Worlds 2, is being let go. This is estimated to be around 60-70 people.
Based on LinkedIn posts, those affected at Obsidian include animators, senior narrative designers, and system designers, some of who have been at the studio for decades.
Obsidian Entertainment is currently working on Grounded 2, which was released in early access in 2025. Two story expansions are also planned for The Outer Worlds 2, although neither have received a release date yet.
Beyond those projects, it’s unclear what the studio is working on, but according to former Obsidian co-founder Chris Avellone on X, a sequel to Avowed is in the pipeline too.
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