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dbot said:
The EDD's revenue was $150 million less than the same quarter last year, while the revenues only increased $110 million in the same quarter. The EDD is expected to receive the bulk of the 5,000 job cuts. It appears that the gaming segment within the EDD has already been impacted. MS shutdown the gamerscore blog as well as an additional first party studio, Aces. This continues the direction of MS sellling or closing first party developers (Bungie and Ensemble). There are additional rumors of a management restructuring for EDD specifically impacting the Xbox division. I don't know if the Xbox is in trouble, but it is unlikely that it is doing as well as some think it is.

I believe they will cut rendundant services and outfits and make essential studios in-house like Nintendo.  Bungie was too casual for MSFT's tastes and Ensemble, although great, isn't known for making annual killer hits continuously.