{"id":3643,"date":"2026-07-06T13:38:02","date_gmt":"2026-07-06T13:38:02","guid":{"rendered":"https:\/\/relocationobserver.com\/?p=3643"},"modified":"2026-07-06T13:38:02","modified_gmt":"2026-07-06T13:38:02","slug":"xbox-to-lay-off-up-to-3200-staffers-in-most-significant-restructure-in-companys-history","status":"publish","type":"post","link":"https:\/\/relocationobserver.com\/?p=3643","title":{"rendered":"Xbox to Lay Off Up to 3,200 Staffers in \u2018Most Significant Restructure\u2019 in Company\u2019s History"},"content":{"rendered":"
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\nXbox is set to layoff 1,600 staffers Monday and up to another 1,600 over the next year in what new CEO Asha Sharma calls the \u201cmost significant restructure\u201d in the Microsoft-owned company\u2019s history.<\/p>\n

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\n\tIn addition, four Xbox studios \u2014 Ninja Theory, Undead Labs, Compulsion and Double Fine, which collectively employee approximately 350 people \u2014 will be spun out or sold. Ninja Theory and Undead Labs are set to be sold to undisclosed buyers, with those contracts pending, while Compulsion and Double Fine will be returned to management and take full control of their IP and revenue streams, a person familiar with the situation tells Variety<\/em>.<\/p>\n

\n\tA fifth studio, the France-based Arkane, is \u201cbeginning required consultation with its Works Council to review potential strategic options,\u201d per Sharma\u2019s memo to staff announcing the changes, which the Xbox CEO posted on X on Monday.<\/p>\n

\n\tIn her memo, Sharma confirmed no previously announced first-party games or projects are being canceled as a result of the staffing reductions.<\/p>\n

\n\tThe layoffs will impact almost every division at Xbox, a source tells Variety<\/em>, but vary in size across developers including Activision, Bethesda\/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. <\/p>\n

\n\tThroughout Xbox\u2019s next fiscal year \u2014 which runs July 1, 2026 \u2013 June 30, 2027 \u2014 the source tells Variety<\/em> the company will see approximately the same content spend as it did over the prior year, which was a record for Xbox. However, the investment in content spend will be different, with titles including \u201cMinecraft\u201d and the \u201cElder Scrolls\u201d franchise being prioritized as major growth areas. <\/p>\n

\n\tThis insider says Xbox has been \u201cusing Minecraft as a funding source\u201d for other studios and that \u201cMinecraft\u201d developer Mojang has \u201cnot been given the funding it needs to grow. For the expansion of \u201cElder Scrolls,\u201d which has not released a new game since 2011, Xbox will be \u201creallocating\u201d some of its teams and funding toward producing new projects.<\/p>\n

\n\tSharma laid out three specific areas of focus for the \u201creset\u201d in her memo, including content portfolio, platform, and \u201chow we operate.\u201d Sharma notes that in some areas of the business, Xbox has up to 14 layers of management, which will be reduced to \u201cno more than 5, and where possible, 3.\u201d<\/p>\n

\n\tAdditionally, Sharma announced she has promoted Helen Chiang to chief operating officer with \u201cend-to-end P&L responsibility across content, hardware, platform, and services,\u201d and that chief operations officer Dave McCarthy is exiting the company.<\/p>\n

\n\t\u201cI recognize that a year-long restructuring creates additional challenges,\u201d Sharma wrote. \u201cUnfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.\u201d<\/p>\n

\n\t\u201cI want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect,\u201d Sharma wrote in closing. \u201cI know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027. History is full of companies that mistake longevity for inevitability. We will not be one of them.\u201d<\/p>\n

\n\tSee Sharma\u2019s memo to staff in full below.<\/p>\n

\nTeam,<\/em><\/p>\n

\nWe are beginning the most significant restructure in XBOX history. After careful consideration, I\u2019ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management. I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.<\/em><\/p>\n

\nI know this is painful. These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today\u2019s decisions do not reflect their talent or dedication.<\/em>\n<\/p>\n

\nOur business today is not healthy. We are operating at margins that are 3\u201310x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.<\/em><\/p>\n

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\nFirst, we will reset our content portfolio.<\/em><\/p>\n

\nSince 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined. We now find ourselves competing not only with the largest publishers, but also with smaller independent studios. It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested. As we reset XBOX, we will help independent creators succeed by providing open development tools and audiences to realize their vision.<\/em><\/p>\n

\nCompulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane\u2019s management is beginning required consultation with its Works Council to review potential strategic options.<\/em><\/p>\n

\nWe are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda\/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. None of our first party publicly announced games or projects are being cancelled as part of these reductions.<\/em><\/p>\n

\nIn addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.<\/em>\n<\/p>\n

\nSecond, we will reset our platform.<\/em><\/p>\n

\nWe know that great technology gets better when it gets simpler, not bigger. Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players. As we reset XBOX, we will simplify.<\/em><\/p>\n

\nWe will reduce management layers to no more than 5, and where possible, 3. We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes. And we will streamline how we work across our tools, with a cleaner code base, shared services, and 50% reduced vendor spend.<\/em><\/p>\n

\nThird, we are resetting how we operate.<\/em><\/p>\n

\nAs XBOX grew our headcount, we became more fragmented. Teams, studios, and functions often operate independently, and it became harder to work towards a shared goal, make the right tradeoffs, and get things done.<\/em><\/p>\n

\nFor the first time, we are establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to me. Over nearly two decades at XBOX, Helen has helped build some of our most important businesses, from XBOX Live to leading Mojang and the Minecraft franchise. She will bring our businesses together under one operating model, making sure we make clear investment decisions, learn from our successes and failures, and hold ourselves accountable for results.<\/em><\/p>\n

\nThank you, Dave McCarthy, who is retiring after 17 years with XBOX. Dave has played a defining role in building the platform that millions of players rely on every day and has been a trusted partner through many of the biggest moments in XBOX\u2019s history. We wish him all the best.<\/em><\/p>\n

\nThese changes are about a bigger future for XBOX, not a smaller one. The next decade of gaming will be larger, more global, and more creative than anything we\u2019ve seen before. This year, we\u2019ll invest as much in XBOX as we ever have, but we\u2019ll invest with greater focus, greater discipline, and greater clarity, all in service of making XBOX where the world plays and creates.<\/em>\n<\/p>\n

\nI want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect. I know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027.<\/em><\/p>\n

\nHistory is full of companies that mistake longevity for inevitability. We will not be one of them.<\/em><\/p>\n

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\nAsha<\/em><\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Xbox is set to layoff 1,600 staffers Monday and up to another 1,600 over the next year in what new CEO Asha Sharma calls the “most significant restructure” in the Microsoft-owned company’s history.<\/p>\n","protected":false},"author":1,"featured_media":3642,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[293],"tags":[1586,1587],"class_list":["post-3643","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gaming","tag-asha-sharma","tag-xbox"],"yoast_head":"\nXbox to Lay Off Up to 3,200 Staffers in \u2018Most Significant Restructure\u2019 in Company\u2019s History - Relocation Observer<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/relocationobserver.com\/?p=3643\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Xbox to Lay Off Up to 3,200 Staffers in \u2018Most Significant Restructure\u2019 in Company\u2019s History - 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