Mike Snider

USA TODAY

Microsoft plans to shut down its Xbox Entertainment Studio as part of its layoff and restructuring plans.

The software giant announced earlier Thursday that it plans to eliminate up to 18,000 jobs over the next year, and the Xbox division's studio, formed last May, will be among the units hit.

Xbox Entertainment Studios President Nancy Tellem, the ex-CBS TV Studio head, and Executive Vice President Jordan Levin, former WB Network CEO, will stay on board and "remain committed to new, original programming already in production," Xbox division head Phil Spencer wrote in an e-mail to employees Thursday.

The studio shuttering is part of the Xbox unit's "plan to streamline a handful of portfolio and engineering development efforts," he wrote. Not affected are programs already in development: Signal to Noise, a documentary series that in its first installment looks at the history of Atari, a Steven Spielberg executive-produced TV series based on the Halo video games and a Halo digital series produced by Blade Runner director Ridley Scott's production team. It recently ran an eight-episode soccer-themed reality series called Every Street United, timed to the World Cup.

"Xbox will continue to support and deliver interactive sports content like 'NFL on Xbox,' and we will continue to enhance our entertainment offering on console by innovating the TV experience through the monthly console updates," Spencer wrote.

And entertainment and sports apps on Xbox game systems — from outlets such as CW, ESPN and Fox — will not be affected, he said.

Spencer did not note how many employees might be affected. Microsoft CEO Satya Nadella said Thursday that the majority of layoffs — about 12,500 — would be professional and factory positions cut as part of its $7.2 billion acquisition of Nokia's handset business, which the company closed in April.

Still, the studio shutdown makes sense, says Digital World Research analyst P.J. McNealy. "It is extremely difficult, especially for a company like Microsoft that doesn't have a core competency in (TV and movie-styled production), to make it a strength," he says. "The Halo series is a natural fit for TV and longer-form video, but the other pieces may not have been as good a fit. ... From a big-picture perspective, (the moves) make sense because they are a company that desperately needs to retool."

Referring to Nadella's letter to employees last week, Spencer said that the CEO had reiterated support for Xbox as "a strong consumer brand, a creative center for gaming and a leader in bold innovation," Spencer wrote. "But for Xbox to be successful, we must remain committed to being a consumer-driven organization with the mission of meeting the high expectations of a passionate fan base, to create the best games and to drive technical innovation."

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