Microsoft confirmed that Xbox will undergo the largest restructuring since its launch in 2001. In a memo addressed to employees, the division's CEO, Asha Sharma, detailed an extensive reorganization plan that includes eliminating up to 3,200 positions over the 2027 fiscal year, in addition to the potential sale, independence, or divestment of several studios.
According to the executive, approximately 1,600 employees will be laid off immediately, with additional cuts occurring progressively in subsequent months. This initiative is part of a strategy aimed at optimizing Xbox's operations following a period of rapid expansion driven by major acquisitions, such as Bethesda and Activision Blizzard.
As part of this reorganization, four studios will formally leave the Xbox structure. Compulsion Games and Double Fine Productions will resume operations as independent entities, preserving their intellectual property rights and freedom to create new titles. Meanwhile, Ninja Theory and Undead Labs are in negotiations to be bought by new investors. The situation of Arkane, which is French, remains undefined; the internal memo indicates that the studio's leadership has begun consulting its workers' council to analyze strategic options, which may involve a sale or other forms of restructuring. Despite these changes, Sharma guaranteed that no previously announced first-party game will be canceled due to the restructuring.
The CEO justified the need for a 'reset' in the division, stating that Xbox operates with significantly lower profit margins compared to other companies in the sector and grew excessively complex in recent years. She pointed out that some areas have up to 14 hierarchical levels, a structure that will be streamlined to a maximum of five, and in some cases, only three management levels. The company also plans to reduce supplier expenses, simplify internal procedures, and realign its teams focusing on projects considered highest priority.
Even if the total investment in content remains at record levels in the next fiscal year, the allocation of these resources will change. Information obtained by Variety indicates that franchises such as Minecraft and The Elder Scrolls will receive greater strategic focus within Microsoft. The studios Mojang and King, responsible for Minecraft and Candy Crush, respectively, will now report directly to the Xbox CEO, underscoring their relevance to the division's development.
Concluding the memo, Sharma acknowledged that the process will be challenging for employees but emphasized that the transformations are essential to ensure the brand's longevity in the coming years. The executive declared that the purpose is to convert Xbox into a platform capable of reaching over one billion daily users and expressed the expectation of putting the division back on a growth trajectory by 2027.
