Xbox Restructuring Hits 3,200 Jobs as Microsoft Sells Off Studios

Microsoft is overhauling the Xbox division in the largest restructuring the platform has ever seen, a move that impacts 3,200 staff members and reshapes the future of first-party game development. The changes include 1,600 immediate layoffs, with the remaining organizational adjustments rolling out through the fiscal year 2027. This shift matters to players because it fundamentally alters which studios will create the exclusive titles that define the Xbox ecosystem in the coming years.

Microsoft sells five first-party studios and cuts 1,600 jobs in major overhaul

Xbox CEO Asha Sharma stated that the company is moving away from owning every independent studio, citing a financial reality where the division lost 64 cents for every dollar invested in a typical year. She noted that it is neither possible nor desirable to own every great studio, and that Xbox is not the best home for every type of creative team. The restructuring aims to flatten the organization by reducing management layers from 14 to just three to five levels.

Five first-party studios are being spun off or sold as part of this new strategy. Compulsion Games and Double Fine will become independent entities while retaining their intellectual properties and ongoing projects. Ninja Theory and Undead Labs are being sold to a new, unnamed company that has received funding guarantees for their upcoming titles. Arkane Studios is also leaving the Xbox fold, though it remains unclear if the studio will go independent or be sold off pending consultations with the French works council.

Helen Chiang has been appointed as the new Chief Operating Officer for Xbox to help navigate this transition. Under the new structure, the Mojang and King teams will report directly to CEO Asha Sharma. This consolidation of reporting lines suggests a push for tighter executive oversight across the remaining core Microsoft gaming divisions.

We have been tracking Xbox closely and looked at earlier reports on the scale of these layoffs. The company is now executing a plan that prioritizes financial sustainability over broad studio ownership. This restructuring marks a definitive end to the previous era of aggressive acquisition and expansion within the Xbox gaming division.