Xbox layoffs: CEO Asha Sharma deems historic job cuts a ‘reset’, not a decline

Xbox CEO Asha Sharma told employees on Monday that the division is undertaking the most significant restructuring in its history by cutting thousands of jobs, describing it as a necessary "reset" of the business rather than a sign of decline.

In an internal memo, which she posted on X, Sharma acknowledged the pain the layoffs would cause, noting they would directly affect people who had poured their creativity into building Xbox, whether they arrived through acquisitions, direct recruitment, or a love of the industry.

The company will eliminate roughly 3,200 roles over FY27, with about 1,600 cuts effective immediately. Four studios — Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs — will exit Xbox under new ownership.


Compulsion and Double Fine will become independent studios retaining their IP and catalogues, while Ninja Theory and Undead Labs will move to new owners with funding to continue their current projects.

Additional reductions will affect other units, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, though no currently announced games are being cancelled.

"Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses," Sharma wrote.

The Xbox CEO also pointed out in her memo that there is a severe industry-wide hardware downturn that has impacted the gaming industry. On the content side, she said Xbox had over-expanded its studio portfolio since 2018 and would shift toward supporting independent creators rather than owning every studio outright. "We must reset XBOX," she wrote.

Beyond the cuts, Sharma said there would be a simplification of how Xbox operates. Management layers, in some cases as many as 14, will be reduced to three to five, with work organised around individual contributors, hands-on team leads, and directly responsible owners of key decisions.

Helen Chiang, a nearly two-decade Xbox veteran who has led the Minecraft franchise, was named the division's first chief operating officer, giving her end-to-end profit-and-loss responsibility across content, hardware, platform, and services.

Sharma said the layoffs, albeit painful, will move the company toward a bigger future, with an ambition to reach more than a billion people daily and a stated goal of returning to growth in 2027. "History is full of companies that mistake longevity for inevitability," she wrote, adding that Xbox does not intend to be one of them.