Xbox Confirms 3,200 Job Cuts as 1,600 Roles Hit Immediately

Microsoft has confirmed that 3,200 employees working at Xbox will be let go over the course of the current fiscal year, with 1,600 positions impacted immediately. The company is framing the move as a major reorganization, and it also says four internal studios will shift away from Xbox’s direct control under new leadership.

Xbox restructure hits 1,600 jobs now

Xbox leadership says the changes represent the biggest adjustment in the division’s history. In a message delivered to staff, Xbox boss Asha Sharma described the restructuring as the most “significant” in Xbox’s timeline, adding that Microsoft’s gaming business “is not healthy.”

As part of the same overhaul, Sharma stated that several teams would transition away from Xbox to be managed independently or under different ownership structures, while Microsoft continues to evaluate how its games strategy will operate going forward.

Studios leaving Xbox management

Two of the studios mentioned are being moved back under new management arrangements with their own intellectual property and production runway. Sharma specifically named Compulsion Games, the studio behind South of Midnight, and Double Fine Productions, known for Psychonauts.

• Compulsion Games will return to new management and transition to an independent studio with its IP and “runway for their next games.”
• Double Fine Productions will also return to new management and transition to independence with its IP and “runway for their next games.”
• Sharma noted that Double Fine’s move means Microsoft will retain the Psychonauts intellectual property itself.
• Sharma said the independent studios’ upcoming titles are not yet announced.

Ownership talks, funding plans, and a consultation in France

Microsoft also described additional changes that point toward future releases, even if details remain limited. In particular, Ninja Theory and Undead Labs were said to be in active negotiations tied to new owners and funding.

• Ninja Theory (creator of Hellblade) and Undead Labs (creator of State of Decay) “have entered terms” to join new ownership.
• That same statement says funding is intended to complete and grow Senua and State of Decay 3.
• Microsoft did not identify who the new owners are, but the language implies those projects are expected to continue under revised management.

In France, Arkane’s Marvel-adjacent project is also affected by the restructure process, but in a different way. Arkane, the studio behind Marvel’s Blade, will begin the legally required steps with its Works Council to “review potential strategic options.”

• Arkane management will consult with its Works Council to review potential strategic options.
• No specific outcome for Marvel’s Blade was provided.

More Xbox layoffs and assurances about announced projects

Beyond the studio-level changes, Microsoft said there are also layoffs across other parts of Xbox and related teams. The company listed multiple major internal and acquired brands as part of the reductions.

• Layoffs are also occurring across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios.
• Microsoft insisted that none of its first-party games or projects that have already been publicly announced are being cancelled as part of the reductions.

Full email text included—additional message content only

The company’s staff email is referenced as part of the developing situation. However, the portion provided here includes no further policy details beyond a note that appears to be contextual text for a named editor, along with contact information.

Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].