More than 1,600 roles have been cut immediately at Xbox as Microsoft announced 4,800 job losses globally – a move the gaming unit’s chief executive described as “the most significant restructure in Xbox history”.
Asha Sharma, who recently took over as Xbox’s chief executive, said in a note to staff that the company was “beginning the most significant restructure in Xbox history”. The cuts, which equate to roughly 2.1% of Microsoft’s total workforce, will see another 1,600 roles reduced from Xbox in addition to the initial 1,600. Four Xbox game development studios – Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab – will be spun off as part of the changes.
“Microsoft has cut 4,800 jobs, with more than 1,600 roles axed at Xbox as part of a 'significant restructure'.”
Amy Coleman, executive vice president at Microsoft, told employees in a memo that the tech giant needed to focus on areas that can deliver for customers amid a “fast-changing industry”. “Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it,” she said. Coleman noted that while the company would not replace the lost roles with AI, “what is true is that AI is changing how work gets done”.
Sharma said in a note shared on X: “These changes are about a bigger future for Xbox, not a smaller one. History is full of companies that mistake longevity for inevitability. We will not be one of them.” She acknowledged the cuts were “painful” but said a “reset” was needed across Xbox’s entire content portfolio, platform and operations.
The announcement comes at an already difficult time in the gaming industry. In 2024, Xbox culled more than 2,000 staff and shuttered four studios bought prior to its bumper acquisition of Call of Duty maker Activision-Blizzard. Little more than a year later, Microsoft said it would cut up to 9,000 jobs after setting out plans to double down on its multi-billion-dollar AI spending. The spiralling costs of hardware have also prompted firms including Microsoft to hike the price of years-old consoles, with many blaming AI data centres for pushing up demand too quickly for supply to catch up.
Tech analyst Paolo Pescatore told the BBC the changes marked a “major reset” for the company, which has further trials ahead. “The challenge is not just cutting costs; it is defining what Xbox stands for in a world where games are moving across console, PC, cloud and subscription platforms,” he said. As part of Xbox’s sweeping changes, Minecraft developer Mojang and Candy Crush developer King will also be affected, though the precise impact on those studios remains unclear.