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Ars Technica Jul 6, 2026 at 16:01 Big Tech Rising Hot

The incredible shrinking Xbox: Five studios, 3,200 employees let go

Move affects ~20% of the gaming division, which will refocus on its biggest franchises.

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By Kyle Orland Original source
The incredible shrinking Xbox: Five studios, 3,200 employees let go

Last month, Xbox executives laid out some "hard truths" about Microsoft's struggling gaming division that they said would require a difficult "Xbox reset." This morning, Microsoft revealed the brutal shape of that "reset," announcing plans for 3,200 layoffs and the divestment of five smaller studios that the company has spent years acquiring and shepherding. Half of those 3,200 layoffs are effective today, new Xbox CEO Asha Sharma wrote, while the other half will come by the end of Microsoft's 2027 fiscal year (which runs through June 30, 2027). CNBC cites "a person familiar with the matter" in reporting that these cuts amount to roughly 20 percent of the Xbox division. When combined with 1,600 newly announced layoffs across the rest of Microsoft, the company as a whole is letting go of just over 2 percent of its workforce. But The Seattle Times reports that Microsoft's total headcount has remained relatively stable thanks to other hiring. Read full article Comments

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Jul 6, 2026 at 16:01 Ars Technica

The incredible shrinking Xbox: Five studios, 3,200 employees let go

Move affects ~20% of the gaming division, which will refocus on its biggest franchises.

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