Xbox Announces 3,200 Job Cuts, 1,600 Employees To Be Eliminated Immediately: All Details

Xbox has begun what CEO Asha Sharma called the most significant restructuring in the division's history, cutting its workforce by approximately 3,200 roles through fiscal year 2027. Of these, 1,600 role eliminations took effect immediately, with the remaining cuts to follow over the course of the year.

What Sharma said in the memo

In a memo to Xbox employees, Sharma said the company's business was 'not healthy', pointing to operating margins running three to ten times lower than comparable platform and publishing businesses. She said Xbox entered the current console generation with a smaller install base and a higher cost structure than rivals, and that bets on Game Pass, multi-platform expansion and a broader content portfolio had not grown at the pace expected.

"I know this is painful," Sharma wrote, acknowledging that the changes would affect people who had built their careers at Xbox, whether they joined through acquisitions, direct recruitment, or a shared passion for the industry.

Departments and studios affected

The reductions span Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios, though the scale of cuts varies by unit. Sharma clarified that no publicly announced first-party game or project is being cancelled as part of the restructuring.

Four studios will exit Xbox under new ownership. Compulsion Games and Double Fine Productions will return to independent management, retaining their intellectual property and existing game catalogues. Ninja Theory and Undead Labs will move to new owners with funding to complete work on Senua and State of Decay 3, respectively. In France, Arkane's management has begun a required consultation process with its Works Council to review the studio's options.

Flatter management structure

Xbox will also restructure its internal hierarchy. Sharma said management layers, which run as deep as 14 in some parts of the organisation, will be reduced to no more than five, and to three where possible. She said platform teams had grown 40 percent larger since the start of the current console generation even as the player base and playtime declined, and that vendor spending would be cut by half.

Helen Chiang has been appointed Xbox's first chief operating officer, with end-to-end responsibility for content, hardware, platform and services, reporting directly to Sharma. Mojang and King, described by Sharma as Xbox's largest platforms by monthly active players, will also now report directly to her. Dave McCarthy is retiring after 17 years with the company.

The road ahead

Sharma said the changes were aimed at building a bigger future for Xbox rather than a smaller one, and that the company would invest as much this year as it ever has, with sharper focus and discipline. She said she wants Xbox to become one of the few companies entertaining more than a billion people daily, and expressed confidence that the division would return to growth in 2027.