Xbox cuts 1,600 jobs today, warns the same number is coming

Xbox just confirmed the layoffs everyone had been bracing for, and the number is worse than it first sounds. CEO Asha Sharma announced 1,600 job losses today, roughly eight percent of the workforce, but she was upfront that this is only half the story. Another 1,600 cuts are expected before the end of the 2027 fiscal year, bringing the total to 3,200, a full fifth of Xbox’s entire staff.

Part of a much bigger Microsoft cut

That’s a chunk of the 6,400 jobs Microsoft is cutting across the business today, with restructuring rippling through several divisions over the next year. Which means a lot of people are going home tonight still employed, but now know their number might be called before this time next year.

“I recognize that a year-long restructuring creates additional challenges,” Sharma said in a statement. “Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.”

Studios split between independence and new owners

Studio-wise, it’s a mixed bag. Compulsion Games and Double Fine Productions are going independent again, out from under Xbox’s roof entirely. Ninja Theory and Undead Labs have reportedly struck deals with new owners who’ll fund the completion of Senua and State of Decay 3, so at least those games aren’t vanishing. Arkane, currently working on the Marvel Blade game, is going through required consultation with its Works Council to figure out what happens next.

Sharma didn’t shy away from the bigger picture either. Cuts are also landing “in varying sizes” across Activision, Bethesda/ZeniMax, Blizzard, King, and Mojang, though she was clear that no publicly announced first-party games are being cancelled. Mojang and King will now report straight to Sharma going forward.

A rare bit of honesty from the top

The honesty in the statement is almost disarming. She admitted Xbox’s business “is not healthy,” running at margins three to ten times lower than comparable platform and publishing companies. The bet on Game Pass, multiplatform releases, and a wider content portfolio simply hasn’t paid off the way leadership hoped.

“I know this is painful,” she said. “These changes will directly affect people who have poured their creativity into building XBOX… Today’s decisions do not reflect their talent or dedication.”

What’s left to watch

Some studios that were rumoured to be facing outright closure survived the day, which is the closest thing to good news here. But that’s cold comfort to the 1,600 people now job hunting in a market that isn’t exactly forgiving right now.

Sharma closed out with the kind of optimism you’d expect: XBOX has “many of the most beloved franchises in entertainment history” and will return to growth by 2027. Whether the people still there believe that is another question entirely.

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