Xbox plans layoffs, even after Microsoft CEO said company is ‘long on gaming’

Xbox is planning significant job cuts and budget reductions for marketing and other business areas in July, according to sources familiar with the company's strategy cited by Bloomberg. These layoffs would be the first under CEO Asha Sharma, who joined Xbox in February. Sharma has already implemented changes such as removing Microsoft's Copilot AI from gaming consoles and reducing Xbox Game Pass prices. She has been open about the company's difficulties, stating at a recent Bloomberg Tech conference that the gaming industry is facing challenges, partly due to AI increasing memory and storage costs. Sharma noted that these costs have risen by 50% in her first 100 days, contrasting with previous expectations of a 50% decrease. She emphasized the challenge of creating affordable products amidst these rising costs. This news follows the recent departure of Craig Duncan, head of Xbox Game Studios, who joined in November 2024, and chief of staff Louise O’Connor. In a blog post last week, Sharma detailed the company's struggles, projecting an accountability margin of approximately 3% for the fiscal year, a decrease from the previous year, excluding Activision Blizzard King's performance over the past five years.