Microsoft cuts 3,200 Xbox jobs in major restructuring effort

Microsoft announced on July 6 that it will eliminate around 3,200 positions across its Xbox video games division as part of what Xbox chief executive Asha Sharma called the "most significant restructure" in the company’s history.

In an email to employees shared on X, Sharma said the Xbox business is facing major challenges, stating: "Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses."

This is an important email I sent today to all employees at XBOX:

Team,

We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include…

— ASHA (@asha_shar) July 6, 2026

She explained that the current organisational structure includes too many management layers, which slows down decision-making and reduces efficiency. According to Sharma, the restructuring plan, described as a "reset," will reduce management levels to a maximum of five layers and to three wherever possible.

The company will immediately cut 1,600 jobs, while the remaining reductions are expected to be completed over the next 12 months. Sharma also confirmed that four game development studios will leave the Xbox group as part of the changes.

The Xbox chief executive noted that both the number of players and the amount of time users spend gaming on Xbox platforms have declined in recent years. She said the restructuring is designed to position the business for future growth, with the long-term goal of reaching more than 1 billion daily users.

“These changes are about a bigger future for XBOX, not a smaller one. The next decade of gaming will be larger, more global, and more creative than anything we've seen before. This year, we'll invest as much in XBOX as we ever have, but we'll invest with greater focus, greater discipline, and greater clarity, all in service of making XBOX where the world plays and creates,” she stressed.

The latest cuts come after Microsoft had already reduced thousands of jobs in its gaming division following the completion of its approximately $69 billion acquisition of Activision Blizzard at the end of 2023.

By Jeyhun Aghazada