Microsoft Axes 3,200 Employees and Divests Five Studios from Xbox Division
Microsoft is cutting 3,200 jobs within its Xbox gaming division and selling off five studios as part of a significant restructuring effort aimed at addressing challenges in its gaming business.
Microsoft has announced plans to lay off 3,200 employees from its Xbox division and divest five smaller studios. The move represents a substantial restructuring for the company's gaming arm, described by new Xbox CEO Asha Sharma as a necessary "Xbox reset" to confront difficult realities.
The workforce reduction will occur in two phases: half of the layoffs are effective immediately, with the remaining half scheduled by the end of Microsoft's fiscal year in June 2027. Reports indicate these cuts constitute approximately 20 percent of the Xbox division's staff. When combined with other recent layoffs across Microsoft, the total workforce reduction accounts for just over 2 percent of the company's global employees, though overall headcount has remained stable due to other hiring.
The divestment of the five studios, acquired over several years, signals a shift in Microsoft's strategy for its gaming operations. While specific details about the studios involved were not immediately released, the decision reflects a broader industry trend of consolidation and strategic realignment.
Company executives cited "hard truths" about the gaming division's performance and the evolving market landscape as motivations for the changes. The restructuring aims to streamline operations and refocus resources on key areas of Microsoft's gaming ambitions.