Microsoft's Xbox Division Faces Major Overhaul With 3,200 Job Cuts

WHO:

GeekWire - Xbox CEO Asha Sharma announced the layoffs.

Techmeme - The affected studios include Ninja Theory, Undead Labs, Compulsion Games, and Double Fine Productions.

WHAT:

Mashable - Microsoft is selling four studios as part of the restructuring, including Compulsion Games and Double Fine Productions, which will become independent.

Deadline - Asha Sharma stated, “Our Business Today Is Not Healthy,” highlighting the need for the restructuring.

Techmeme - Xbox's revenue has decreased by 5% in the quarter that ended in March.

Eurogamer.net - Xbox's teams are now 40% larger than they were at the launch of the company’s most recent consoles in 2020.

TechCrunch - Microsoft cut around 4,800 roles, or 2.1% of its global workforce, on Monday.

Deadline - The layoffs will include 1,600 immediate job cuts, with the remaining cuts occurring over the rest of fiscal 2027.

Eurogamer.net - Asha Sharma stated, "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."

Kotaku - The Elder Scrolls Online has generated $2 billion in revenue and had been played by 24 million people as of 2024.

Kotaku - The Elder Scrolls Online's most recent expansion, Solstice, launched in June 2025, and the game has moved to a seasonal structure with Season 1 launching in two days.

Eurogamer.net - Xbox's teams are 40% larger than they were when the company’s most recent consoles launched in 2020.

Techmeme - Xbox Game Pass currently has about 30 million subscriptions; Microsoft had projected Game Pass subscriptions would reach around 77 million this year.

Techmeme - Microsoft plans to cut about 3,200 jobs from its Xbox division throughout the 2027 fiscal year, with 1,600 roles being eliminated immediately.

Techmeme - Xbox will divest five studios, including Ninja Theory, Compulsion Games, and Double Fine Productions, to streamline the business.

Techmeme - Xbox's revenue decreased by 5% in the quarter which ended in March.

Techmeme - Xbox console prices will climb by $100-$150 depending on the model as of August 1.

Deadline - Xbox CEO Asha Sharma stated, “We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.”

Techmeme - Microsoft plans to cut about 3,200 jobs from its Xbox division throughout the 2027 fiscal year, with 1,600 roles being eliminated immediately.

Kotaku - The Elder Scrolls Online team has been heavily impacted, with reports suggesting that as much as half of the development team may have been laid off.

Eurogamer.net - Asha Sharma expressed hopes that Xbox can be a company that "entertains more than a billion people each day."

Techmeme - Xbox Game Pass currently has about 30 million subscriptions; Microsoft had projected Game Pass subscriptions would reach around 77 million this year.

Eurogamer.net - Asha Sharma stated, "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."

Kotaku - The Elder Scrolls Online team has been heavily impacted, with reports suggesting that as much as half of the development team may have been laid off.

Kotaku - The Elder Scrolls Online has generated $2 billion in revenue and had been played by 24 million people as of 2024.

Kotaku - The Elder Scrolls Online's most recent expansion, Solstice, launched in June 2025, and the game has moved to a seasonal structure with Season 1 launching in two days.

Eurogamer.net - Asha Sharma stated, "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."

Eurogamer.net - Sharma noted that Xbox's teams are 40% larger than they were when the company’s most recent consoles launched in 2020.

ABC News Tech - Microsoft is cutting 4,800 jobs, including many in its Xbox division.

CBS News Tech - Microsoft is slashing more than 3,000 jobs from its Xbox unit.

TechCrunch - Microsoft cut around 4,800 roles, or 2.1% of its global workforce.

Mashable - Over 30% of the layoffs will come from Xbox.

GeekWire - Xbox will cut 3,200 jobs as part of a major restructuring.

Deadline - The layoffs include 1,600 immediate job cuts, with the remaining cuts occurring over the rest of fiscal 2027.

Variety - Xbox is set to lay off up to 3,200 staffers in total.

WHERE:

TechRadar - The restructuring is taking place within Microsoft's Xbox division.

WHEN:

Deadline - The layoffs will occur over the rest of fiscal 2027.

WHY:

Fast Company - Asha Sharma noted that Xbox is operating at margins that are 3-10 times lower than comparable platform and publishing businesses.

Fast Company - Asha Sharma stated, “Our business today is not healthy,” citing the need for a significant restructuring due to the current state of the business.

DW.com - The layoffs are part of a broader reorganization designed to “reset” Xbox as it faces heightened competition.

Techmeme - Asha Sharma stated, “We must reset Xbox,” citing the need for a significant restructuring due to the current state of the business.

Kotaku - The restructuring was described as necessary for improving long-term growth, with a focus on major franchises like Fallout and The Elder Scrolls.

CBS News Tech - The video game industry is facing what Microsoft calls the "most severe hardware crisis in its history."

GeekWire - The restructuring aims to turn around a division that has been losing 64 cents on every dollar invested in its studios.

Deadline - Asha Sharma stated, “Our Business Today Is Not Healthy.”

HOW:

Techmeme - The restructuring includes a new COO and a flattened management structure aimed at improving long-term growth.

Techmeme - Xbox will divest five studios, including Ninja Theory, Compulsion Games, and Double Fine Productions, to streamline the business.

Techmeme - The Xbox division will divest five studios to streamline the business.

(UPDATED July 7, 2026 13:38 UTC)

Microsoft is selling four studios, including Compulsion Games and Double Fine Productions, as part of a restructuring effort aimed at improving the company's health, according to Asha Sharma. She emphasized that Xbox is currently operating at margins significantly lower than its competitors, which has contributed to a 5% revenue decrease in the last quarter. The restructuring will also introduce a new COO and a streamlined management structure to foster long-term growth for the gaming division.

(UPDATED July 7, 2026 11:48 UTC)

Microsoft has announced significant layoffs, cutting around 4,800 roles, which represents 2.1% of its global workforce, with 1,600 of those job cuts happening immediately and the rest planned for the remainder of fiscal 2027. This restructuring, prompted by a need to "reset" Xbox amid increasing competition, will feature a new COO and a streamlined management structure to foster long-term growth. Asha Sharma emphasized the company's ambition for Xbox to entertain over a billion people daily while acknowledging that "our business today is not healthy."

(UPDATED July 7, 2026 01:28 UTC)

Microsoft is set to cut about 3,200 jobs from its Xbox division during the 2027 fiscal year, with 1,600 positions being eliminated immediately, as part of a significant restructuring effort. To streamline operations, Xbox will also divest five studios, including Ninja Theory and Double Fine Productions, while raising console prices by $100 to $150 starting August 1. Asha Sharma emphasized the need for this reset, which includes appointing a new COO and implementing a flatter management structure to foster long-term growth.

(UPDATED July 6, 2026 21:21 UTC)

Microsoft is set to cut around 3,200 jobs from its Xbox division throughout the 2027 fiscal year, with 1,600 positions being eliminated immediately. Xbox CEO Asha Sharma highlighted that the company is operating at margins that are three to ten times lower than those of comparable platform and publishing businesses, and they will also divest five studios, including Ninja Theory and Double Fine Productions, to streamline operations. Reports indicate that the layoffs have significantly impacted The Elder Scrolls Online team, with as much as half of the development staff potentially affected.

(UPDATED July 6, 2026 19:28 UTC)

Xbox Game Pass currently boasts about 30 million subscriptions, falling short of Microsoft's projection of 77 million for the year. Asha Sharma expressed confidence in achieving this goal, highlighting the strength of Xbox's beloved franchises and talented studios, with a commitment to returning to growth by 2027. The recent restructuring is seen as a necessary step to enhance long-term growth, particularly focusing on major franchises like Fallout and The Elder Scrolls.

(UPDATED July 6, 2026 17:48 UTC)

The Elder Scrolls Online team has faced significant challenges, with reports indicating that as much as half of the development staff may have been laid off. Despite these setbacks, the game has generated an impressive $2 billion in revenue and attracted 24 million players since its launch, with its latest expansion, Solstice, having debuted in June 2025 and a new seasonal structure set to kick off in just two days. In related news, Asha Sharma expressed her vision for Xbox to entertain over a billion people daily and highlighted that the company's teams are now 40% larger than they were at the launch of their most recent consoles in 2020.

(UPDATED July 6, 2026 16:04 UTC)

Microsoft is making significant cuts, announcing the layoff of 4,800 jobs, with a substantial portion coming from its Xbox division. Xbox CEO Asha Sharma revealed that up to 3,200 staffers will be affected, including immediate job cuts of 1,600, with the rest to follow throughout fiscal 2027. The restructuring will involve divesting five studios, including Ninja Theory, Undead Labs, Compulsion Games, and Double Fine Productions, as part of an effort to address what Microsoft describes as the "most severe hardware crisis in its history." This move comes as the Xbox division has been losing 64 cents on every dollar invested in its studios, prompting the need for a turnaround. Sharma emphasized that “Our Business Today Is Not Healthy,” highlighting the urgency of these changes.