Microsoft's Xbox Cuts 3,200 Jobs, Divests Five Studios
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- Microsoft's Xbox plans to cut ~3,200 jobs over the next year, with 1,600 layoffs effective Monday, in what the company is calling a "reset" (per Bloomberg).
- The division will divest up to five studios, with Ninja Theory and Undead Labs marked for sale while Compulsion Games and Double Fine will spin off as independents.
- Xbox CEO Asha Sharma is leading the announcement, framing the cuts as necessary to make Xbox "healthy" again after publicly admitting the business currently isn't (per Fortune, MarketWatch, and GamesRadar coverage).
- Bethesda and ZeniMax face heavy impact, with Kotaku and Windows Central reporting the Elder Scrolls Online team was "seemingly halved" and the studios pivoting to a franchise-centric planning model.
- Obsidian Entertainment is reportedly losing around 25% of its workforce, while id Software saw 60-70 developers cut from its coding team, per Video Games Chronicle and Game Developer headlines.
- Coverage from over 50 outlets—including The New York Times, The Washington Post, Ars Technica, IGN, and Reuters—indicates the cuts rank among the largest in Xbox's history.
Why it matters: With roughly 20% of Xbox's workforce eliminated and multiple acquired studios put up for divestiture, the cuts expose how quickly Microsoft's gaming expansion has soured. The immediate stakes for developers at Bethesda, Obsidian, and id Software aren't just employment but which major franchises—Elder Scrolls, Fallout, Doom—survive a reset Sharma said Xbox isn't healthy enough to weather without.
