Microsoft Cuts 3,200 Xbox Jobs, Sells Five Studios
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- Microsoft's Xbox unit plans to cut 3,200 jobs over the next year, including 1,600 effective Monday, in what Xbox CEO Asha Sharma called a division "reset"
- Xbox will divest up to five studios: Ninja Theory and Undead Labs will be sold, while Compulsion Games and Double Fine will spin off as independents
- Asha Sharma told staff the Xbox business "is not healthy" and pledged a return to growth by 2027, framing the cuts as a strategic pivot
- Microsoft justified the cuts by citing margins 3-10x lower than comparable platform and publishing businesses, per Tom's Hardware's read of internal documents
- Studio-level impact is severe: Obsidian is reportedly losing around 25% of its workforce and the Elder Scrolls Online team has been seemingly halved, per Push Square and Kotaku
- Cross-coverage is unusually massive—Bloomberg, Reuters, BBC, The Verge, IGN, Washington Post, CNN, AP, and 50+ other outlets converged on the cuts within hours
Why it matters: Microsoft is shedding roughly 20% of its Xbox staff and offloading studios it acquired for billions through the Bethesda/ZeniMax and Activision deals—a concrete retreat from the hardware-and-IP-expansion strategy that defined the past three Xbox generations. With specific studios losing a quarter of their workforce and margins disclosed as 3-10x below comparable platform businesses, this functions less as cost-cutting and more as a strategic reset of the gaming arm.
