Xbox CEO Asha Sharma informed staff on Monday that the division is carrying out its largest-ever restructuring by eliminating thousands of positions. She described the move as a required reset rather than evidence of decline. In a memo shared on X, Sharma recognized the hardship for affected employees who contributed creatively to Xbox through acquisitions, hiring, or industry passion. Roughly 3,200 roles will be cut during FY27, with about 1,600 taking effect immediately. Four studios—Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs—will leave Xbox. Compulsion and Double Fine will operate independently while retaining their intellectual property. Ninja Theory and Undead Labs will transfer to new owners with continued project funding. Other reductions will impact units including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, though no announced titles face cancellation. Sharma stated current margins are three to ten times below those of comparable businesses. She also cited a broad hardware market slowdown and noted that Xbox had expanded its studio holdings excessively since 2018. The company plans to favor support for independent creators over direct ownership. Management layers will be reduced from as many as 14 to between three and five. Helen Chiang, a long-time Xbox executive who oversaw Minecraft, was appointed chief operating officer with profit-and-loss responsibility for content, hardware, platform, and services. Sharma said the changes, though difficult, aim to expand reach beyond one billion daily users and restore growth by 2027.
