Xbox to Announce Major Layoffs Next Month

Xbox is poised to announce a significant round of layoffs next month, Bloomberg reports, citing multiple insiders who confirmed the move will follow the close of Microsoft’s fiscal year on June 30. The cuts are expected to extend beyond staffing, affecting marketing and other operational areas, though the exact number of employees to be affected remains undisclosed.

In a purported internal email sent to staff today, CEO Asha Sharma highlighted that the division has poured $20 billion into content over the past five years—excluding the $69 billion spent on Activision Blizzard King. Despite this hefty investment, annual revenue fell by nearly half a billion dollars during the same period, and the business’s profitability has slumped to a mere 3% “accountability margin.”

Sharma went on to explain that the expansion of the studio network was initially driven by the need to support multiple strategic pillars—subscription, streaming, and device ecosystems. However, the rapid pivot to new strategies in a market flooded with readily available content has stretched the division thin. While Xbox remains steward of iconic franchises with massive player demand, the company acknowledges it has not invested enough to keep pace with competitors. The recent Showcase event underscored the necessity of a steady flow of first‑ and third‑party exclusives and fresh IP, prompting a reassessment of investment priorities over the next five years.

Since taking the helm of the division in February, Sharma has been openly advocating for a bold overhaul of the business model. He’s repeatedly called for “hard choices” and a strategic reset, explaining that the company must cut costs and rethink its approach to titles and services. To date, his initiatives have included slashing the Game Pass price, removing day‑one access to Call of Duty to recoup losses from a subscriber decline last year, reexamining the exclusivity strategy for games like Gears of War: E‑Day and Clockwork Revolution, and hinting at new revenue models that could shape next‑generation consoles.

The latest wave of restructuring follows closely on the heels of Xbox’s most recent large‑scale layoffs, which were part of a broader Microsoft initiative that affected 9,100 employees across the company. This round saw 200 staff members let go from Candy Crush, the cancellation of a Perfect Dark reboot, the shuttering of The Initiative studio, the termination of a ZeniMax MMORPG, and a restructured Rare studio that had been working on Everwild. These moves came less than a year after another significant layoff of 650 Xbox employees, which itself followed a nearly 2,000‑person reduction just nine months earlier.