Microsoft has initiated the most significant restructuring in Xbox history, confirming 1,600 immediate job losses within the gaming division and a total planned reduction of 3,200 positions by fiscal year 2027. According to an internal email from Asha Sharma, the company is divesting from four studios—Double Fine, Compulsion Games, Ninja Theory, and Undead Labs—to improve sector profitability.
The Scale of the Xbox Restructuring
The workforce reduction is part of a broader corporate plan involving 6,400 total layoffs across Microsoft over the next 12 months. While the Xbox division accounts for 1,600 of today’s job cuts, the company plans to shed another 1,600 roles in the coming years to reach the 3,200-person total. This represents less than 3% of Microsoft’s total global workforce, yet it marks a major shift in the company’s gaming strategy.
The total planned reduction of 6,400 employees across all Microsoft sectors over the next year is designed to streamline operations and focus resources on the company’s highest-performing assets.
Which Studios Are Leaving Xbox?
Microsoft is offloading four specific teams from its Xbox Game Studios portfolio. According to official company disclosures, Double Fine and Compulsion Games have been granted independence and will retain full rights to their intellectual property. Ninja Theory and Undead Labs have been placed on the market for sale.
The future of the French studio Arkane remains in flux. Management is currently conducting consultations to determine the best path forward for the studio, though no final decision has been announced. Simultaneously, the ZeniMax organization—which manages Bethesda—is undergoing a structural overhaul. The goal is to narrow its focus exclusively to major franchises, including The Elder Scrolls, Fallout, DOOM, Quake, and Wolfenstein.
Why Is Microsoft Cutting Costs Now?
The restructuring follows a period of missed expectations for the Xbox brand and a recent decline in revenue. Asha Sharma, in her communication to staff, cited the need for increased profitability and efficiency. The company is also adjusting its hardware strategy, with Microsoft confirming that prices for the Xbox Series X and Xbox Series S consoles will rise in select markets to address these financial pressures.
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Frequently Asked Questions
- How many people are losing their jobs at Xbox?
A total of 1,600 employees are being let go today, with plans for a total reduction of 3,200 roles within the Xbox division by the end of fiscal year 2027. - What happens to the four studios being cut?
Double Fine and Compulsion Games are moving to independent status with their own IP rights. Ninja Theory and Undead Labs are currently listed for sale. - Are console prices changing?
Yes, Microsoft has confirmed that Xbox Series X and Series S consoles will see price increases as part of the brand’s new financial strategy.
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