Microsoft-owned Xbox has announced plans to lay off 3,200 employees, around 20 per cent of its workforce, as part of a major restructuring aimed at improving profitability and sharpening its focus on artificial intelligence and long-term growth.
In a message shared with employees, Xbox CEO Asha Sharma said 1,600 staff members would be laid off immediately, while the remaining job cuts would take place during the 2026-27 financial year. She stressed that the decision reflected the company’s financial challenges rather than the performance of its employees.
If you enjoyed reading this article, you can help support our journalism by adding OHeraldo as a preferred source.
“Our business today is not healthy. We are operating at margins that are 3-10 times lower than comparable platform and publishing businesses,” Sharma wrote, adding that the gaming industry is facing one of its most difficult hardware markets in years.
Alongside the workforce reduction, Xbox plans to divest four gaming studios and is preparing to part ways with another as part of a broader effort to streamline operations. The company will also reduce its management structure, cutting layers from as many as 14 to no more than five, with some teams operating with just three levels of management.
Sharma said Xbox has been losing 64 cents for every dollar invested annually and outlined plans to reduce vendor spending by 50 per cent while increasing support for independent game developers through open development tools and wider platform access.
The restructuring also includes a leadership change, with veteran executive Helen Chiang promoted to the newly created role of Chief Operating Officer. She will oversee content, hardware, platform and services under a single operating model.
Despite the significant layoffs, Sharma said Xbox would continue investing heavily in its future, promising greater discipline and focus. She expressed confidence that the restructuring would position the company for sustainable growth over the next decade while strengthening its role in the evolving gaming industry.
