Xbox CEO Asha Sharma Announces 3,200 Layoffs by Fiscal 2027

The job cuts, which represent about 8 percent of the gaming workforce, will occur over the next two fiscal years. Sharma said the reductions will span multiple teams, including game studios, corporate functions, and support roles, as Microsoft looks to streamline operations.

In an internal memo to staff, Sharma described the move as the most significant restructuring in Xbox history. She said the company will shift resources toward fewer, larger projects, prioritizing franchises with proven global appeal and investing in subscription services like Game Pass.

The announcement follows a period of rapid expansion for Xbox, including its $69 billion acquisition of Activision Blizzard in 2023. That deal brought popular titles such as Call of Duty and Candy Crush under Microsoft's umbrella, but also added thousands of employees and overlapping roles.

Sharma said affected employees will receive severance packages and career transition support. She did not specify which studios or projects will be impacted, but said the company will communicate details to teams in the coming weeks.

The layoffs are part of a broader cost-cutting effort across Microsoft, which has trimmed jobs in other divisions this year. The gaming unit, however, remains a key growth area for the company, with revenue from Xbox content and services reaching record highs in recent quarters.