Xbox Layoffs: CEO Asha Sharma Shares Email Sent to Employees, Confirms Job Cuts and Studio Reset
Xbox CEO Asha Sharma announced a massive restructuring, cutting 3,200 jobs and divesting four studios, including Double Fine and Ninja Theory. The "reset" aims to fix weak margins and operational complexity, with new COO Helen Chiang leading a shift to a flatter, more disciplined operating model.
In a landmark announcement, Xbox CEO Asha Sharma has unveiled a comprehensive "reset" for the gaming division, confirming that the company will reduce its workforce by approximately 3,200 roles throughout the 2027 fiscal year. The restructuring, which Sharma described as the most significant in the company’s history, includes an immediate elimination of 1,600 positions this week, with the remaining cuts scheduled over the coming year.
Strategic Content and Studio Divestments
The restructuring involves a significant shift in how Xbox manages its sprawling content portfolio. To streamline operations, four studios, Compulsion Games and Double Fine Productions, are transitioning to independent ownership, while Ninja Theory and Undead Labs have entered agreements to join new owners. As per Xbox CEO Asha Sharma, the division is also reviewing strategic options for its France-based Arkane studio. Despite these changes, the company has confirmed that no previously announced first-party games or active projects are being cancelled. Xbox Layoffs: Microsoft to Cut 3,200 Jobs and Divest 4 Gaming Studios.
Flatter Management and Platform Reset
Beyond studio changes, Xbox is moving to simplify its internal operations by reducing management layers to a maximum of five, with a preference for three-layer structures. This initiative aims to remove bureaucratic complexity that has slowed decision-making. Helen Chiang has been appointed as the new Chief Operating Officer, tasked with overseeing a unified operating model that integrates content, hardware, and services under a single P&L responsibility to ensure greater accountability.
Addressing Financial Challenges
The memo highlights that the Xbox business has been operating at margins significantly lower than comparable publishing entities. Citing a smaller-than-expected growth trajectory for Game Pass and a severe hardware market crisis, the leadership team emphasised the need for greater fiscal discipline. By streamlining code bases, reducing vendor spending by 50%, and focusing investment on growth franchises like "Minecraft" and "Elder Scrolls," Xbox aims to return to profitability and growth by 2027.
(The above story first appeared on LatestLY on Jul 06, 2026 07:57 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
