Xbox Announces 3,200 Layoffs and Studio Divestments

Microsoft's Xbox division announced a substantial "reset" this morning, involving the layoff of 3,200 employees and the divestment of five acquired studios. New Xbox CEO Asha Sharma stated that half of these layoffs are effective immediately, with the remaining half scheduled to occur by the end of Microsoft's 2027 fiscal year, which concludes on June 30, 2027. These workforce reductions represent approximately 20 percent of the Xbox division's staff, according to a person familiar with the matter cited by CNBC. This move follows recent pronouncements from Xbox executives about the need for difficult changes within the gaming division. The total number of layoffs across Microsoft, including an additional 1,600 across other divisions, accounts for just over 2 percent of the company's global workforce. Despite these cuts, The Seattle Times reports that Microsoft's overall headcount has remained relatively stable due to concurrent hiring efforts elsewhere within the company. The divestment of the five studios marks a significant shift in Xbox's strategy, as these studios had been integrated into the company's portfolio over several years. The exact financial implications and the specific identities of the divested studios were not immediately detailed in the announcement, but the scale of the layoffs underscores a period of significant re-evaluation for Microsoft's gaming operations.