Microsoft’s Xbox division is undergoing a major restructuring led by Xbox CEO Asha Sharma. Multiple outlets report that Xbox will eliminate about 3,200 jobs through fiscal year 2027, describing it as the largest “reset” in Xbox’s history. One report also cites a larger figure—4,800 jobs—associated with broader Microsoft cuts and a “significant restructure,” but the Xbox-specific plan centers on 3,200 layoffs. According to Sharma’s communications to staff, about 1,600 roles are eliminated immediately, with the rest following over the year. The company also plans to simplify its operating model by reducing management layers and streamlining platform teams, while cutting vendor spending. The restructuring includes changes to Xbox studios: four studios are slated to leave the division under new ownership arrangements. Compulsion Games and Double Fine Productions are set to return to independent management while retaining their intellectual property and existing catalogues; Ninja Theory and Undead Labs will move to new owners with funding tied to completing active projects. Arkane begins a consultation process regarding its future. Sharma links the overhaul to weaker margins, an underperforming hardware cycle and stagnant growth expectations for initiatives including Game Pass and multi-platform expansion, with an aim to return to growth by 2027. Reports say no publicly announced first-party games or projects are being cancelled as part of the restructuring.