Microsoft Xbox cuts 3,200 jobs, divests four studios

Microsoft has initiated a major restructuring of its Xbox gaming division, cutting 3,200 jobs and divesting four game studios in what the company calls a historic reset. The move is part of broader corporate layoffs totaling 4,800 employees globally, with 1,600 of the Xbox cuts taking effect immediately.

Xbox CEO Asha Sharma, who took over the division earlier this year, stated the business is not operating healthily, with profit margins significantly lower than comparable platform and publishing businesses. She noted the company lost 64 cents for every dollar invested in recent years. While strategies like the Game Pass subscription service and expanding the content portfolio created value, Sharma said they did not grow at the anticipated pace.

As part of the reset, Microsoft will spin off or sell four development studios: Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs. The company is also exploring strategic options for Arkane Studios. Sharma confirmed no publicly announced first-party games have been canceled due to the restructuring. The layoffs will affect other major studios under the Xbox umbrella, including Bethesda, Activision Blizzard, and Mojang.