Amazon’s long-running quest to become a major player in the video game industry has come to a dramatic crossroads. On October 28, 2025, the tech behemoth announced sweeping layoffs—slashing approximately 14,000 jobs company-wide, with its gaming division among the hardest hit. Industry insiders and company memos reveal that Amazon is not only cutting staff but also fundamentally changing its approach to gaming, scaling back its ambitions for big-budget, blockbuster titles and massively multiplayer online games (MMOs).
According to Bloomberg, Amazon’s vice president of Audio, Twitch, and Games, Steve Boom, told employees in a memo that the company is reducing “the amount of work it does on big-budget titles, particularly surrounding massively multiplayer online games or MMOs.” The restructuring has led to the reported closure of Amazon Game Studios in Irvine and San Diego—studios responsible for flagship projects like New World and a highly anticipated Lord of the Rings MMO. The move comes as part of a broader efficiency drive under CEO Andy Jassy, who has already overseen multiple rounds of layoffs since taking the helm in 2021.
The layoffs, which some reports peg at up to 30,000 across Amazon’s global workforce, have sent shockwaves through the gaming community. Christoph Hartmann, vice president of Amazon Games, outlined the changes in an internal memo obtained by GamesRadar, stating, “We have made the difficult decision to halt a significant amount of our first-party AAA game development work.” Instead, Amazon will pivot to focus on casual games and AI-driven experiences—areas seen as more in line with the company’s technological strengths and less risky than the volatile world of AAA game development.
This strategic realignment is not just about trimming costs. As reported by Variety and Kotaku, Amazon’s gaming division has long struggled to turn massive investment into success. Since its launch in 2012, Amazon Games has poured billions into hiring top talent, acquiring studios, and developing original titles. Yet, the results have been underwhelming. High-profile failures like Crucible—shut down just months after launch—and the uneven trajectory of New World have cast doubt on Amazon’s ability to compete with established industry giants like Electronic Arts and Activision Blizzard.
For employees and fans alike, the human and emotional cost of these changes is palpable. The closure of the Irvine and San Diego studios was confirmed by MMO developer Lum, who posted on social media, “Can confirm AGS Irvine and AGS San Diego are gone. This means New World either goes on maintenance mode or is passed off to a third party (probably the former) and the LOTR Hot Shelob game is gone.” This sentiment was echoed across social platforms, where affected workers and gaming enthusiasts lamented the end of ambitious projects. One X (formerly Twitter) user wrote, “Man, this sucks. ☹️ AGS hit among the 33,000 Amazon employee layoffs today,” capturing the widespread sense of loss and disappointment.
The timing of the layoffs is particularly jarring for fans of New World, which had just launched the well-received Nighthaven expansion across PC and consoles in early October. Within the update, players discovered a heartfelt letter from the development team, now interpreted as a farewell message. The letter thanked players, stating, “We have watched the world, delighted in its players and reveled in your enjoyment of every perfect moment, every carefully crafted story, and we even bore witness to the joining of two souls who met here in Aeternum.” It also raised a glass to developers who had moved on, further fueling speculation about the studio’s fate.
Amazon’s official response, provided to MassivelyOP, offered some reassurance for fans of certain titles. “We will continue supporting Throne and Liberty and Lost Ark with regular updates and community engagement,” the company stated. However, there was no clear information about the future of New World or the Lord of the Rings MMO, leaving both projects’ fates uncertain. The silence has only added to the anxiety among players and developers alike.
The ripple effects of Amazon’s retreat from AAA gaming are being felt industry-wide. As Wccftech noted, “Amazon Game Studios is not immune to the mass 14,000+ layoff sweeping across the entire company, suffering ‘significant’ cuts.” Other tech giants, including Microsoft and Sony, have also trimmed their gaming divisions in recent years, but Amazon’s abrupt pivot is particularly stark given its vast resources and initial ambitions.
Why did Amazon’s gaming ambitions falter? Analysts point to a mix of cultural and strategic missteps. According to Video Games Chronicle, the company’s tech-driven approach often clashed with the creative needs of game development. Engineers and data scientists sometimes found themselves at odds with designers and artists, leading to internal disarray and missed opportunities. The company’s decision to tie major gaming projects to its Prime Video ecosystem—hoping for synergy between shows like The Lord of the Rings: The Rings of Power and related games—added complexity and pressure, rather than delivering the expected boost.
Financially, the gaming division has been a drag on Amazon’s bottom line. The layoffs come amid a broader push for efficiency across the company’s sprawling operations, from e-commerce to cloud computing. As GameRant highlighted, “Amazon is preparing to lay off several thousand staff members across the entire company, including significant cuts in its video game division,” underscoring how gaming fits into the company’s cost-control narrative.
Looking forward, Amazon’s new strategy is to focus on casual and AI-powered games. The company’s strengths in cloud technology—via AWS and its Luna gaming service—and advances in artificial intelligence could help it carve out a niche in emerging gaming trends. Hartmann’s memo emphasized continuing “casual and AI-focused games,” suggesting a future where Amazon leverages its technical prowess rather than chasing the elusive AAA blockbuster.
Still, questions remain. Will Amazon’s pivot to casual and AI-driven experiences pay off, or is it simply a retreat from a field where it failed to gain traction? For now, the era of Amazon chasing AAA gaming glory appears to be over. The company’s experience serves as a cautionary tale for tech giants entering creative industries: deep pockets alone don’t guarantee a hit, and success in gaming requires more than just technology—it demands vision, patience, and a deep understanding of what makes games fun.
