Microsoft Cuts 3,200 Xbox Jobs, Exits Five Studios in Division-Wide Reset
Microsoft is eliminating 3,200 jobs from its Xbox gaming division and divesting five smaller studios, new Xbox CEO Asha Sharma announced, in what the company has framed as an "Xbox reset." Half of those cuts take effect immediately; the remainder will follow by the end of Microsoft's fiscal year 2027, which closes June 30, 2027. A person familiar with the matter told CNBC the reductions amount to roughly 20 percent of Xbox's total divisional headcount.
Key takeaways
- Microsoft is eliminating 3,200 jobs from its Xbox gaming division and divesting five smaller studios in what it calls an "Xbox reset."
- New Xbox CEO Asha Sharma announced the cuts, which a person familiar with the matter said amount to roughly 20 percent of Xbox's total divisional headcount.
- Half of the Xbox cuts take effect immediately, with the rest following by the end of Microsoft's fiscal year 2027 on June 30, 2027.
- The Xbox layoffs come alongside 1,600 additional cuts elsewhere at Microsoft, reducing the company's global workforce by just over 2 percent.
- The announcement gave no revenue target, profitability timeline, or financial terms for the divested studios.
Microsoft is eliminating 3,200 jobs from its Xbox gaming division and divesting five smaller studios, new Xbox CEO Asha Sharma announced, in what the company has framed as an "Xbox reset." Half of those cuts take effect immediately; the remainder will follow by the end of Microsoft's fiscal year 2027, which closes June 30, 2027. A person familiar with the matter told CNBC the reductions amount to roughly 20 percent of Xbox's total divisional headcount.
The Numbers Behind the Reset
The Xbox-specific layoffs come alongside 1,600 additional cuts across the rest of Microsoft. Combined, the company is reducing its global workforce by just over 2 percent. The Seattle Times reported that Microsoft's overall headcount has remained relatively stable, with hiring elsewhere in the company offsetting the announced reductions. The gross figure does not capture how much recruiting Microsoft continued even as Xbox contracted.
The split timeline carries its own weight. Half of the 3,200 Xbox employees are out today. The other half face exits stretched across the next year, with the full toll not reaching its floor until June 30, 2027. That runway extends the uncertainty — for employees and for the studios still standing.
Five Studios Gone, Years of Acquisitions Reversed
Five smaller studios are being divested — properties Microsoft spent years acquiring and shepherding into the Xbox portfolio. Their exit marks a direct reversal of the strategy behind those deals. No financial terms for the divestitures were disclosed in the announcement.
What "Hard Truths" Left Out
Last month, Xbox executives described the gaming division's situation in stark terms, invoking "hard truths" and signaling a painful reset ahead. Sharma's announcement fills in the headcount math: roughly one in five Xbox employees gone, five studios out the door. What the announcement does not supply is a revenue target, a profitability timeline, or a clear articulation of what a smaller Xbox is built to accomplish. The reset is now defined by subtraction. What it adds remains unspecified.
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Filed by the macro desk of MarketPR on July 7, 2026. Source: arstechnica.com. Indicative figures are not investment advice.