Xbox announced a series of layoffs today, beginning its process of downsizing.
As reported by CNBC and confirmed in a press release, Microsoft cut 4,800 jobs, accounting for nearly 2.1% of its workforce, to reduce costs. Within the Xbox division, 1,600 jobs will be cut, accounting for nearly 20% of its staff. Additional cuts are expected in the forthcoming months. Per Xbox CEO Asha Sharma, approximately 3,200 employees will be let go, with the remaining 1,600 in the 2027 fiscal year.
Additional changes to Xbox include shifting over four studios to new management, per a press release posted by Sharma. Both Compulsion Games and Double Fine Productions will now become independent studios. Meanwhile, Ninja Theory and Undead Labs will be led by other owners, allowing them to continue their work on franchises such as “Senua” and “State of Decay 3.” Over in France, Arkane will also begin reviewing other management options.
“I want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect. I know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027,” said Sharma per a press release. “History is full of companies that mistake longevity for inevitability. We will not be one of them.”
The cuts come amid rising costs of making video gaming equipment, such as consoles.
Forbes reported that Sharma addressed the rising costs, saying that at the start of her tenure as CEO, Xbox paid more than twice as much for console storage components as it had the previous year. Since then, the costs have reportedly doubled once again.
This is an important email I sent today to all employees at XBOX:
— ASHA (@asha_shar) July 6, 2026
Team,
We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include…
Last week, Xbox announced new programs aimed at making the Xbox consoles more affordable. These additions include a buy-now, pay-later option, interest-free financing, the use of previously owned consoles, and the purchase of refurbished consoles. Xbox is reportedly suffering more than any other gaming brand due to “choices” it has made over the past five years. By August 1, their prices are expected to increase by $100, to $500.
“Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses,” said Sharma in her press release. “And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.”
Black and African American workers account for approximately 6.6% to 7.2% of Microsoft’s U.S. workforce.
