Microsoft Cuts Thousands of Jobs Across Xbox and Commercial Sales in Sweeping Restructure

Microsoft is laying off thousands of employees across its Xbox division and commercial sales business, with Xbox alone cutting 3,200 staff and spinning off four studios in what CEO Asha Sharma described as the most significant restructuring in the company's gaming history. The layoffs, which affect approximately 4,800 workers company-wide according to The Verge, come just a year after Microsoft eliminated 9,100 roles and signal continued pressure in the tech and gaming industries.

"I know this is painful."

IGNXbox Boss Asha Sharma Announces 3,200 Layoffs, Including 1,600 Today, With 4 Studios Leaving for New Management — Read the Email to Staff in Full

Sharma's internal email, obtained by IGN, acknowledged the immediate impact as 1,600 Xbox employees lost their jobs on July 6. The remaining 1,600 cuts will be phased in over the next year, according to reports from Variety and The Hollywood Reporter. Meanwhile, The Verge reported that Amy Coleman, Microsoft's chief people officer, attributed the broader reductions to changes in the technology industry and the need to adjust resources and operations.

VarietyXbox to Lay Off 3,200 Employees and Sell Four Studios in Major Restructure

"The business is not healthy"

Sharma admitted that the prolonged restructuring creates additional challenges for staff, as The Hollywood Reporter noted. Beyond the job cuts, four Xbox studios are being sold or spun out: Ninja Theory and Undead Labs are being sold to undisclosed buyers, while Compulsion and Double Fine will be returned to management control with full ownership of their IP and revenue streams, Variety reported. The studios employ roughly 350 people combined.

The moves mark one of the largest shake-ups in Xbox's history, following recent reports of major job cuts in July that Polygon said had been anticipated. As the gaming industry continues to face headwinds, Microsoft's decision to slim down its workforce and divest studios signals a strategic pivot toward efficiency over expansion.

polygonMicrosoft's Xbox division lays off over 3,200 employees