Overview
- Microsoft announced an immediate reduction of 4,800 roles, including about 1,600 at Xbox, and said it will cut a further 1,600 Xbox jobs by the end of fiscal 2027 for a total of 6,400 Xbox-related reductions.
- The reorganization removes four studios from Microsoft’s reporting perimeter and includes plans to return Compulsion Games and Double Fine to independent control and find new owners or investors for other studios.
- Asha Sharma, head of Microsoft Gaming, said operating margins at Xbox are three to ten times lower than comparable platforms and publishers, and that high structural costs require a reset of the business.
- The immediate layoffs equal roughly 2% of Microsoft’s global workforce and follow earlier large rounds of cuts in 2023 and 2025, increasing pressure on employees who will face role losses and studio transitions.
- Microsoft said it will simplify management layers and aim to improve profitability; the move follows a strategy centered on Game Pass and acquisitions that has not driven the expected growth or margins.