Microsoft Restructures Xbox, Cutting 3,200 Jobs and Divesting Five Studios

Overview

• Microsoft will eliminate 3,200 roles in the Xbox division, with 1,600 layoffs taking effect immediately and the remainder phased over the next 12 months.
• Xbox will sell Ninja Theory and Undead Labs, return Double Fine and Compulsion Games to private ownership, and begin consultations on Arkane Studios' future.
• Xbox leadership says the moves respond to much lower margins, weaker console sales and changing product development demands after heavy prior investments such as the 2023 Activision Blizzard acquisition.
• The company says publicly announced projects will not be cancelled, but investors reacted negatively and Microsoft shares fell following the announcement.
• The overhaul reverses part of Xbox’s buy-to-build strategy, shifts resources toward a smaller set of big franchises and is meant to free spending for Microsoft’s broader AI and data‑center priorities, with direct effects on thousands of employees and partner studios.