'I Know This Is Painful': Xbox CEO Asha Sharma On 3,200 Job Cuts

Xbox CEO Asha Sharma has announced what she called the most significant restructuring in the gaming division's history, informing employees that the company will cut its workforce by approximately 3,200 roles through fiscal year 2027. The reset arrives at a console giant caught between falling margins and a hardware crisis it can no longer outrun.

The scale of the cuts

In a memo to staff, Sharma said 1,600 role eliminations would take effect immediately, with the remaining reductions spread across the year. Four studios, she said, would leave Xbox under new management. Sharma acknowledged the toll of a restructuring stretched over a year, writing that it was 'not possible to make all the necessary changes in a single day.'

She was direct about the human cost. "I know this is painful," she wrote, adding that the affected employees had joined Xbox through acquisitions, recruitment or sheer love of the industry, and that the day's decisions said nothing about their talent or dedication.

Why the business needed a reset

Sharma pointed to margins running three to ten times lower than comparable platform and publishing businesses as the core problem. Xbox entered the current console generation with a smaller install base and a heavier cost structure, she said, and bets on Game Pass, multi-platform expansion and a wider content portfolio failed to grow fast enough to offset that.

As the core business weakened, the company kept adding teams and investment in search of a turnaround that did not arrive, she said. Sharma also flagged what she described as the industry's most severe hardware crisis to date as an added pressure point.

Studios changing hands

Compulsion Games and Double Fine Productions will return to independent management, retaining their intellectual property and studio catalogues. Ninja Theory and Undead Labs will move to new ownership with funding to complete their current projects. In France, Arkane has begun a required consultation process with its Works Council over its future.

Sharma said reductions would also hit Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios in varying degrees, though no publicly announced first-party game or project is being cancelled.

A flatter, simpler Xbox

Sharma said management layers, which run as deep as 14 in parts of the organisation, would be cut to no more than five, and to three where possible. Platform teams, she noted, had grown 40 percent larger since the start of the current console generation even as player numbers and playtime declined. Vendor spending will be reduced by half.

Helen Chiang has been named Xbox's first chief operating officer, taking end-to-end responsibility for content, hardware, platform and services, and will report directly to Sharma. Mojang and King will now also report to her directly. Dave McCarthy is retiring after 17 years at Xbox.

Looking ahead

Sharma framed the overhaul as building toward a larger future rather than a smaller one, telling staff Xbox would invest as much this year as ever, but with sharper focus. She said she wants Xbox to be among the few companies reaching more than a billion people daily, and expressed confidence the division would return to growth in 2027.

Published on: Tuesday, July 07, 2026, 10:43 AM IST