Xbox Cuts 3,200 Jobs, Divests Five Studios in Reset
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- Xbox is cutting approximately 3,200 jobs and divesting five studios — including Ninja Theory (the 'Hellblade' and 'Senua' maker) — in the largest restructuring in its history, per Sharma's memo and subsequent coverage by Bloomberg and the BBC.
- Compulsion Games and Double Fine will become independent studios, while Undead Labs and Ninja Theory will be sold off, with the fifth studio also leaving the Xbox stable, per Bloomberg and GamesRadar.
- Sharma told staff the Xbox business is 'not healthy,' with margins reportedly 3-10x lower than comparable platform and publishing businesses, per Tom's Hardware's coverage of the announcement.
- About 1,600 layoffs took effect immediately, with the remainder to follow by year's end, according to IGN's publication of Sharma's internal email.
- King and Mojang will now report directly to Sharma, signaling a flatter management structure; Helen Chiang was appointed COO with studio management capped at five layers, per GamingBolt and Mobilegamer.biz.
- Cross-outlet consensus: every major outlet (NYT, WSJ, The Verge, AP, IGN, Forbes, Kotaku) frames the move as a financial correction rather than a strategic withdrawal, and Sharma pledged that no publicly announced first-party games are being cancelled.
Why it matters: Microsoft is effectively conceding that its $75B Activision-era gaming bet structurally underperforms — a 3-10x margin gap versus peers is the kind of figure that triggers Wall Street-led pressure rather than purely internal decisions. Roughly 3,200 roles and five studios disappear in one stroke, and the studios going independent (Compulsion, Double Fine) versus being sold (Undead Labs, Ninja Theory) suggests Microsoft is sorting assets by perceived salvage value rather than blanket-cutting.
