Xbox CEO Asha Sharma has announced a major restructuring of Microsoft’s gaming division, with around 3,200 employees set to lose their jobs as the company seeks to build a more focused and sustainable business.
In a message to employees, Sharma said the decision followed lessons from recent investments and highlighted the need to improve efficiency across Xbox operations. She reportedly noted that some investments had not delivered expected returns, with the company losing “64 cents for every dollar” invested in certain areas.
The layoffs will impact teams across Xbox, including game studios and development operations. Microsoft is also reviewing its studio portfolio, with some projects being cancelled or reconsidered as the company prioritises franchises and services with stronger growth potential.
Sharma said the restructuring was aimed at creating a more agile organisation and allowing teams to focus on projects that provide greater value to players and the business.
The move comes as Microsoft continues to reshape its gaming strategy after major investments, including the acquisition of Activision Blizzard and expansion of Xbox Game Pass. The company has been pushing beyond console sales through cloud gaming, subscriptions and multi-platform game releases.
However, the gaming industry has faced growing pressure due to rising development costs, slower market growth and changing player habits. Several global gaming companies have announced layoffs and project cancellations as they attempt to control expenses.