Xbox layoffs have been officially confirmed after CEO Asha Sharma announced the biggest restructuring in the company’s history, with approximately 3,200 jobs set to be cut during FY27.
In a message sent to Xbox staff and later shared publicly, Sharma said around 1,600 roles would be eliminated immediately, while four studios would leave Xbox under new management as part of the wider restructuring.
“I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX,” Sharma said. “Today’s decisions do not reflect their talent or dedication.”
Sharma said the company is reshaping its business after acknowledging that “Our business today is not healthy.” The email cites lower operating margins, slower-than-expected growth across Game Pass and other initiatives, alongside what Sharma described as “the most severe hardware crisis in its history.”
As part of the overhaul, Compulsion Games and Double Fine Productions will return to independent ownership with their intellectual property, back catalogue and funding for upcoming projects. Ninja Theory and Undead Labs have also entered agreements to move to new ownership with backing to complete and expand the Senua and State of Decay 3 franchises. In France, Arkane’s management has begun the required consultation process with its Works Council to review potential strategic options.
The restructuring will also affect teams across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios. Sharma said that none of Xbox’s publicly announced first-party games or projects are being cancelled as a result of the cuts.
Beyond its content business, Xbox plans to simplify its organisational structure by reducing management layers to a maximum of five, and in some cases three, while cutting vendor spending by 50%. The company will also establish a new Chief Operating Officer position, with Helen Chiang promoted to oversee content, hardware, platform and services under a single operating model.
Despite the scale of the changes, Sharma said Xbox intends to continue investing heavily in its future. “These changes are about a bigger future for XBOX, not a smaller one,” Sharma wrote. “This year, we’ll invest as much in XBOX as we ever have, but we’ll invest with greater focus, greater discipline, and greater clarity.”
Sharma concluded the message by saying the company expects to “return to growth in 2027” and remains focused on becoming “one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect.”
