Microsoft has confirmed the immediate elimination of 4,800 jobs, representing 2.1% of its global workforce, as part of a broader cost-reduction strategy tied to the company’s shift toward artificial intelligence. According to reports from CNBC, 3,200 of these positions are within the Xbox division, with 1,600 roles already cut as of Monday. The restructuring also involves the divestment of four gaming studios, including Compulsion Games and Double Fine Productions, which will return to independence, while Ninja Theory and Undead Labs transition into a new entity.
Why is Microsoft restructuring the Xbox division?
The company is prioritizing resources to align with the rapid evolution of technology. Amy Coleman, Microsoft’s director of human resources, stated in a message to employees reported by CNBC that the way technology is built and deployed is changing faster than at any previous point in her career. Asha Sharma, CEO of Xbox, noted that while the restructuring process is challenging, it is a necessary step. Sharma indicated that the company will return to growth in 2027, emphasizing that the required changes cannot be fully implemented in a single day.
Before the official confirmation, Business Insider reported that Microsoft was evaluating a reduction of its workforce, which numbered 220 thousand workers, specifically flagging sales, consulting, and gaming divisions as primary areas of focus.
What is happening to Microsoft’s gaming studios?
Microsoft is moving to reduce its footprint in game development through a series of divestments. As reported by CNBC, the company is offloading four studios to streamline its operations. Compulsion Games and Double Fine Productions are set to regain their independence. Meanwhile, Ninja Theory and Undead Labs have reached an agreement to merge into a newly formed company. These changes coincide with a broader shift in how the company approaches its commercial business and customer sales strategies.
How will the price of Xbox consoles change?
Beyond workforce reductions, Microsoft is increasing the retail price of its gaming hardware. Starting August 1, the cost of the 512GB Xbox model will rise by $100, while the 1TB model will see a $150 increase. The 2TB model will be discontinued entirely. Microsoft stated on June 25 that these adjustments are driven by rising costs in memory and storage components, which have increased by more than 2.5 times and are projected to double again by the end of 2027.
The company noted that it had previously implemented price hikes of $20 to $70 in October 2025. According to Microsoft, the decision to raise prices again was made after months of attempting to find alternatives with suppliers. Unlike many other consumer electronics, such as computers or phones, Microsoft stated that consoles are typically sold at prices lower than their production cost, making them particularly vulnerable to the ongoing global component crisis.
If you are considering a hardware purchase, monitor official retail channels closely. With the discontinuation of the 2TB model and upcoming price hikes, inventory availability for current models may fluctuate significantly in the coming weeks.
Frequently Asked Questions
How many jobs is Microsoft cutting in total?
Microsoft is cutting 4,800 jobs, which is 2.1% of its total workforce. Of those, 3,200 are located within the Xbox division.
Are Compulsion Games and Double Fine Productions closing?
No, they are not closing. According to CNBC, these studios are being desintegrated from Microsoft and will return to being independent companies.
Why are Xbox console prices increasing?
Microsoft attributes the price hikes to the rising cost of memory and storage components, which have increased by more than 2.5 times. The company stated that it typically sells consoles at a loss, making it difficult to absorb these hardware cost increases.
When does the new pricing take effect?
The price increase for Xbox consoles is scheduled to begin on August 1.
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