Xbox CEO Asha Sharma has confirmed the bad news that everyone was expecting today, announcing a wave of 1,600 employees laid off (about eight percent of the company), with another 1,600 expected before the end of the 2027 fiscal year to bring the total to 3,200 jobs lost (20 percent of its whole workforce).
This is just a percentage of the 6,400 total employees planned to lose their jobs at Microsoft as a whole today, with massive changes and closures happening across several of the tech company’s divisions over the next year. And so, many workers will remain at the company while knowing that a bunch more cuts are still to come.
“I recognize that a year-long restructuring creates additional challenges,” Sharma said in a statement. “Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.”
As part of the changes, former Xbox-owned studios Compulsion Games and Double Fine Productions “will return to management and transition to independent studios,” while Ninja Theory and Undead Labs “have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3.” Meanwhile, Arkane (working on Marvel’s Blade game), “is beginning required consultation with its Works Council to review potential strategic options.”
Sharma’s statement is a lengthy one, highlighting how the business must change in order to make it more profitable. This includes many other heavy-hitters, including changes that “vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios.” Thankfully, “none of our first party publicly announced games or projects are being cancelled as part of these reductions.” Minecraft maker Mojang and Candy Crush maker King will also now report “directly” to Sharma.
Sharma said that the Xbox business today “is not healthy,” highlighting that the company is “operating at margins that are 3-10x lower than comparable platform and publishing businesses.” She lamented that “to grow, we bet on Game Pass, multi-platform, and a broader portfolio of content,” but it has not panned out.
“I know this is painful,” she said. “These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.”
The silver lining, if there is any, is that several studios have not closed today like some were expecting, but that does little to dull the pain of the 1,600 employees who are now looking for jobs in an uncertain job market and future.
“I want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect,” Sharma said. “I know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027.”
