Xbox CEO Asha Sharma is making big changes as part of a complete overhaul to try to redirect Xbox. Xbox will eliminate 3,200 jobs, approximately a 20% reduction in its workforce. 1,600 of these jobs are being cut on July 6, 2026; the next 1,600 will be cut over the next year. Sharma has not provided any information on when the next 1,600 jobs will be cut, leaving employees in limbo for the next year as these layoffs proceed. Not only will Xbox be cutting these jobs, but its parent company, Microsoft, also plans to cut 3,200 jobs outside of Xbox, which is in addition to more than 15,000 job cuts made last year.
These job cuts are far from the only big changes coming, as there will also be major changes to the studios that fall under Xbox. Both Double Fine and Compulsion Studios will become independent studios owned by their management while retaining the rights to their respective IPs. Undead Labs and Ninja Theory are being sold and will fall under new management not associated with Xbox. Upcoming games Senua and State of Decay 3 will both move forward, funded by their new owners.
A fifth studio, Arkane, has entered a phase of “consultation” with its Work Council. The consultation period has not been made public. ZeniMax Media, the parent company of Bethesda Softworks, also saw significant cuts and is undergoing a complete overhaul, focusing on Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein. Jason Schreier at Bloomberg states that while studios in the Bethesda organization like id Software and ZeniMax Online are not shutting down, they are cutting a significant number of staff.
Sharma is also making a big change with two of its most popular franchises. Minecraft under Mojang and Candy Crush under King will now both report directly to her, as they previously fell under the Xbox content area. Sharma believes that Xbox has not invested enough in Minecraft and wants to allocate more resources to the game.
Right now, Xbox has around one billion active players annually, but in the email sent to Xbox employees, later shared by her on X (formerly Twitter), Sharma has set a goal of reaching more than that daily. Sharma is not satisfied with the growth that Game Pass delivered for Xbox, as it fell short of expectations.
Sharma says that for every dollar Xbox invested in the business, it lost 64 cents. Sharma is feeling positive regarding newer investments, though, saying that “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.” In her message, she claims: “We must reset XBOX.”
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