A company representative said 34 positions were eliminated in Microsoft Game Studios--about 3 percent of the division's work force of 1,229 employees.
The representative characterized the layoffs as part of routine reorganization.
"As a matter of business we continually evaluate our development strategies and investments to ensure we are achieving our most important objectives," the representative said. "As the Xbox business transitions from an aggressive start-up to a mature business, our games portfolio strategy is focused on creating the most ambitious platform-driving games. As part of this effort, development operations are being streamlined to be more efficient and better position the business for long-term success and profitability."
Microsoft Game Studios employs developers from several studios Microsoft acquired to boost its roster of popular games for the Xbox. These include Bungie, which created the multi-million-selling "Halo." The division has also assimilated developers from Rare, the revered British studio Microsoft bought for $375 million last year.
New consoles need successful first-party titles, because these attract an audience that can't find the games on other machines. But Microsoft lately has shifted its attention to Xbox Live, the growing online service for the game console, as the key distinguishing factor in its approach to video games.
While 34 jobs is barely a blip in a Microsoft worldwide work force of about 55,000, it's unusual for the ever-growing software behemoth to lay off workers. Last month, however, Microsoft also eliminated 161 consulting jobs. Chairman Bill Gates said last week that the company plans to hire an additional 5,000 workers as it boosts research and development efforts.