Xbox Reset: Know All About the Latest Xbox Layoffs, Reasons and Studio Changes
Microsoft has announced an "Xbox reset," resulting in 3,200 planned job losses and the spin-off of several game studios. The division is also implementing price hikes for consoles and Game Pass, alongside a shift towards exclusive titles and a brand rebranding under CEO Asha Sharma.
Microsoft has announced a significant restructuring of its gaming division, which it has termed an "Xbox reset." This major strategic shift, driven by rising component costs and operational challenges, involves widespread staff reductions and a reorganisation of its internal studio ecosystem.
As per a report by The Verge, the company confirmed that approximately 1,600 employees were laid off on July 6, 2026, with an additional 1,600 staff members expected to be cut over the course of the next fiscal year. The announcement followed a memo sent to staff by Xbox CEO Asha Sharma and Chief Content Officer Matt Booty, which cited an "over extended" studio system and the impact of a significant memory and storage shortage. Layoffs in US: Job Cuts Drop 40% in 1st Half of 2026; AI Remains Primary Driver.
Xbox Layoffs: Structural Changes to Game Studios
The restructuring includes a significant change in the ownership of several high-profile studios. Double Fine Productions and Compulsion Games are set to become independent entities once more, while ownership of Ninja Theory and Undead Labs will be transferred to new parent companies. Furthermore, management at Arkane Studios has begun formal consultations with its Works Council to evaluate potential strategic options for the future of the studio.
The impact of these changes extends across the wider Microsoft gaming portfolio, including Activision, Blizzard, Bethesda/ZeniMax, King, and Mojang. Reports indicate that these divisions will face varying degrees of internal adjustment, with id Software expected to reduce its workforce by approximately half. Xbox Layoffs: Employees Nervous and Scared Due to Delayed Job Cuts, Says Report.
Strategic Shifts Under New Leadership
Under the leadership of Asha Sharma, who took the role of Xbox CEO earlier this year, the division has begun implementing several controversial strategic shifts. These include upcoming price increases for Xbox consoles, the introduction of a lower-priced Game Pass tier that excludes new Call of Duty titles, and a formal rebranding of the division to XBOX. Additionally, Microsoft has moved to make upcoming projects such as Gears of War: E-Day and Clockwork Revolution exclusive to the Xbox console platform.
(The above story first appeared on LatestLY on Jul 11, 2026 09:10 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
