Xbox to Cut Jobs, Sharma Urges Staff to Reassess Priorities

Bloomberg’s latest insider scoop reveals that Microsoft is poised to announce a significant round of layoffs within its Xbox division, with the timing slated to follow the close of the company’s fiscal year on June 30. While the exact number of positions to be cut remains undisclosed, industry observers anticipate a substantial reduction in workforce.

In tandem with workforce reductions, Xbox is set to trim its marketing spend and other operational budgets, a decision that underscores a broader cost‑optimization strategy across the division.

These adjustments come on the heels of a bold announcement by Xbox’s new chief executive, Asha Sharma, who addressed the Bloomberg Tech Conference this weekend. Sharma outlined a plan to “reset the business” and acknowledged that the division was “not in a healthy spot,” signaling a decisive turnaround effort.

The timing of these cuts is particularly noteworthy, arriving exactly one year after Microsoft’s massive 9,000‑job reduction last summer. That earlier wave had a profound impact on the Xbox ecosystem, leading to the cancellation of high‑profile projects such as the Perfect Dark reboot and Rare’s Everwild, among others.

Microsoft has announced sweeping layoffs across its Xbox ecosystem, cutting roughly 1,900 positions in 2023 and 2024 from key studios such as Activision Blizzard, Bethesda, and its own Xbox division.

In a candid internal memo that later surfaced on Xbox Wire, Asha Sharma, the head of Xbox, revealed that the division’s profitability has slipped to a mere 3% “accountability margin,” the company’s benchmark for profit efficiency.

Sharma highlighted that, excluding Activision Blizzard King, Xbox has invested over $20 billion in content, platform development, and hardware subsidies over the past five years, yet annual revenue has fallen by nearly half a billion dollars during that period. She warned that this unsustainable trajectory must end soon.

These revelations suggest that Microsoft will soon reevaluate its studio portfolio and game slate, aiming to align spending with realistic revenue expectations and restore long‑term profitability.

In her recent statement, the studio’s leadership highlighted how the expansion of their internal development network was initially driven by the need to support a diverse array of content strategies—spanning subscriptions, streaming services, and a wide range of devices.

However, the company has now found itself stretched thin, having pursued shifting priorities amid a market flooded with readily available content.

Despite stewarding some of the industry’s most iconic franchises, the studio admits it has not allocated sufficient resources to fully capitalize on the immense potential and player appetite for these titles.

During the weekend Showcase, the importance of maintaining a steady stream of both first‑party and third‑party exclusives, as well as fresh intellectual property, became crystal clear. The company recognizes the urgent need to recalibrate the balance between these content pipelines and its long‑term investment strategy over the next five years.