Xbox Layoffs: Microsoft Gaming Division Announces Major Job Cuts and Budget Slashes, Say Reports
Microsoftâs Xbox division is planning significant layoffs and budget cuts following the end of its fiscal year on 30 June. CEO Asha Sharma confirmed the âbusiness reset,â citing a decline in annual revenue despite USD 20 billion in investments. The move aims to address low profit margins and surging costs for critical hardware components.
Redmond, June 11: Microsoftâs Xbox division is set to undergo a major round of layoffs next month, alongside substantial reductions in marketing and operational budgets. The restructuring marks the first significant strategic shift under CEO Asha Sharma, who assumed leadership of the gaming unit in February. The planned job cuts are expected to take place shortly after the close of Microsoftâs fiscal year on 30 June.
The decision follows a period of mounting pressure on the Xbox business, which has struggled with slowing hardware sales, increased production costs, and a performance record that CEO Asha Sharma has described as ânot in a healthy spot.â In an internal memo shared with employees and subsequently made public, Sharma revealed that the divisionâs accountability margin had fallen to just 3%. Salesforce Layoffs Severance: Company Offers Superior Severance Packages to Employees Affected by Recent Job Cuts; Check Details.
Sharmaâs communication provided a candid assessment of the division's fiscal performance, noting that, excluding Activision Blizzard King, Microsoft has invested over USD 20 billion into content, platforms, and hardware subsidies over the past five years. Despite this substantial expenditure, annual revenue for the core Xbox business has declined by nearly USD 500 million during the same period. âGoing forward, this cannot continue,â Sharma stated, adding that the division had become âoverextendedâ while attempting to execute multiple conflicting strategies across subscriptions, streaming, and physical hardware.
A significant factor contributing to the current restructuring is a sharp increase in the costs of essential hardware components, particularly those required for storage. Sharma highlighted that Microsoft is currently paying five times more for certain storage components than it was two years ago, a challenge exacerbated by broader industry demand for hardware suited to artificial intelligence. Tech Layoffs 2026: Over 1.16 Lakh Employees Laid Off Globally So Far; AI Transformation and Restructuring Cited as Main Reasons.
As part of the âreset,â the division plans to rebuild its platform infrastructure and conduct a comprehensive review of its existing portfolio. The changes follow other notable adjustments implemented by Sharma earlier this year, including a reduction in pricing for the Game Pass service and a strategic shift regarding the release schedule of flagship titles. Moving forward, Xbox aims to refine its development pipeline and better align its studio investments with its long-term goals for gaming and entertainment, ensuring the brand remains competitive in an evolving digital landscape.
(The above story first appeared on LatestLY on Jun 11, 2026 08:37 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
