Microsoft sells four Xbox studios in major gaming cuts
▼ Summary
– Microsoft is laying off 4,800 employees, with over 30 percent of the cuts affecting its Xbox division.
– The Xbox job losses will impact around 1,600 employees and are described as a “reset” moment for the company.
– Four game studios are being spun off from Microsoft to operate independently.
– The layoffs are not final; Microsoft plans to cut about 20 percent of Xbox jobs by July 2027.
– The cuts will affect nearly every part of the Xbox division.
Microsoft has begun cutting 4,800 jobs company-wide today, with over 30 percent of those reductions concentrated in its Xbox division. The sweeping cuts, described internally as an Xbox “reset” moment, will eliminate roughly 1,600 roles across the gaming unit. Xbox CEO Asha Sharma confirmed in an internal memo that the layoffs extend beyond today, as Microsoft plans to shed approximately 20 percent of Xbox positions by the end of its fiscal year in July 2027.
Nearly every corner of Xbox will feel the impact. In a dramatic shift, four game studios are being spun off to operate independently from Microsoft, severing their direct ties to the company. The affected studios include Double Fine and Compulsion Games, both of which were acquired in past years to bolster Xbox’s first-party lineup. This move marks a significant retreat from the aggressive studio acquisition strategy that defined the earlier part of the decade.
The layoffs and studio divestitures come as Microsoft continues to reassess its gaming business amid broader economic pressures and shifting priorities. While the company has not disclosed which other teams face the deepest cuts, the memo indicates that the restructuring is intended to streamline operations and refocus resources on core growth areas. For the thousands of employees affected, the news lands as a stark reversal after years of expansion and investment in Game Pass and console exclusives.
(Source: The Verge)
