Microsoft Slashes 3,200 Jobs in Xbox Division, Sells Five Game Studios

Microsoft has announced a major restructuring of its Xbox gaming division, involving the elimination of approximately 3,200 jobs. The first 1,600 layoffs have already taken place, with the remaining cuts scheduled by the end of the 2027 fiscal year. Xbox CEO Asha Sharma explained that the division’s profitability is 3 to 10 times lower than comparable platforms and publishers, with the company losing 64 cents for every dollar invested.

As part of the restructuring, Microsoft is selling four studios: Compulsion Games and Double Fine will return to their founders’ ownership, while Ninja Theory and Undead Labs will transition to new owners. The fifth studio, Arkane, remains under consultation due to France’s strict labor laws. All studios will continue working on current projects, including *Marvel’s Blade* and *State of Decay 3*.

Xbox leadership plans to optimize the business structure by reducing management layers and concentrating on profitable franchises. Studios under Activision, Bethesda, and ZeniMax will focus on titles like *Fallout*, *Doom*, and *The Elder Scrolls*. Meanwhile, Mojang and King—home to the largest active user bases—will now report directly to Sharma.

Sharma emphasized that the changes aim to expand the business, not shrink it. Over the next decade, Microsoft plans to invest in Xbox at the same level as before but with greater discipline and a sharper focus on profitability. Key priorities include exclusive console titles, the development of Project Helix, and a return to the *XBOX* branding.