Microsoft’s Xbox division is carrying out what CEO Asha Sharma calls the “most significant restructure” in the platform’s history, eliminating 3,200 jobs over the next year. According to multiple reports, about 1,600 positions are eliminated immediately, with the remainder expected over the rest of fiscal 2027. Sharma tells employees in an internal memo that the company’s current business performance “is not healthy,” framing the changes as necessary to “reset Xbox” and support future growth.
In addition to layoffs, Xbox is restructuring parts of its studio portfolio. Several outlets report that four studios—Ninja Theory, Undead Labs, Compulsion Games, and Double Fine Productions—are affected. Other coverage also describes additional studio divestments and notes that some of the studios being exited are based in Europe, aligning with broader plans to reduce or sell parts of the company’s development operations.
Reports also estimate the job cuts as roughly 20% of Xbox staffing. The announcements are part of a larger Microsoft reorganization aimed at addressing difficulties in the gaming division and changing its operating model.
