Microsoft Announces Major Xbox Overhaul, Cutting 4,800 Jobs
Microsoft has recently made a significant announcement: it will be laying off approximately 4,800 employees, which equates to about 2.1% of its global workforce. This sweeping restructuring is set to impact the Xbox gaming division the most. Xbox CEO, Asha Sharma, has described this move as the most substantial restructuring in Xbox’s history.
Initially, around 1,600 Xbox roles will be eliminated. However, further cuts are anticipated, which are expected to result in a total reduction of approximately 3,200 jobs in the gaming division. This equates to about 20% of the global Xbox workforce and is expected to be completed by the end of the fiscal year 2027.
Adding to the drama, four Xbox game studios will be spun out of Microsoft entirely. Compulsion Games and Double Fine Productions are set to transition to independent studios, while Ninja Theory and Undead Labs are negotiating terms to join new ownership.
These changes coincide with Microsoft’s staggering investment of $190 billion in AI infrastructure and data centers in 2026. This comes at a time when its stock has fallen nearly 19% this year. Xbox revenue has been consistently declining, with content and services revenue dropping 5% in recent quarters. Sharma acknowledged that the division had been “operating at margins that are 3–10x lower than comparable platform and publishing businesses” and that studios had been losing 64 cents for every dollar invested.
Amy Coleman, Microsoft’s Executive Vice President and Chief People Officer, wrote in a staff memo, “Our business is changing because the world around it is changing.” The company has stated that it will not be replacing lost jobs with AI, but acknowledges that technology is “changing how work gets done.”
Source: CNBC – Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios