Microsoft Cuts 4,800 Jobs, Spins Off Four Xbox Studios
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- Microsoft is eliminating 4,800 jobs immediately (2.1% of workforce), with Xbox absorbing 3,200 of those cuts total — roughly 20% of the gaming division's staff — through fiscal year 2027.
- Four Xbox studios will be spun off: Compulsion Games and Double Fine Productions will return to independence, while Ninja Theory and Undead Labs "have entered terms to join new ownership."
- Arkane Studios, the France-based developer acquired in Microsoft's $8.1 billion ZeniMax deal, is consulting its works council on "strategic options," and the commercial sales business also faces reductions.
- Xbox CEO Asha Sharma projected the division "will return to growth in 2027," with 1,600 cuts Monday and another 1,600 spread across the year-long restructuring.
- Chief People Officer Amy Coleman wrote that "AI isn't replacing laid-off workers" but acknowledged AI is automating daily tasks and reshaping how work gets done at Microsoft.
- More than one-third of eligible U.S. employees accepted Microsoft's first-ever voluntary retirement program, introduced in April for senior-director-level staff and below; the stock has fallen 19% in 2026, the worst among megacap tech.
Why it matters: Xbox is shedding one in five employees and divesting four studios as Microsoft cuts 4,800 jobs overall, with chief people officer Amy Coleman insisting "AI isn't replacing laid-off workers" — yet the stock has fallen 19% in 2026, the worst among megacap tech.
