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Microsoft has officially confirmed major changes to Xbox's structure. Xbox's chief executive, Asha Sharma, informed staff that the largest restructuring in the brand's history is under way. The company plans to lay off thousands of people, simplify the organisational structure and change how development studios are managed. All of this is intended to help Xbox return to a growth path after difficult years. At the same time, Microsoft says none of the previously announced first-party games have been cancelled.
Xbox will cut thousands of jobs and restructure its studios
Microsoft has announced cuts of around 3,200 positions in fiscal 2027. The first wave will affect roughly 1,600 roles immediately, with further changes rolled out over time. The company admits the current business model is not delivering the expected results. According to Ashy Sharmy, Xbox’s margins are three to ten times lower than those of comparable companies in the industry. Microsoft also acknowledges that growth of Game Pass and the strategy of releasing games across multiple platforms has not progressed as quickly as planned. As part of the changes, Compulsion Games and Double Fine Productions will become independent studios again, retaining their brands. Ninja Theory and Undead Labs are set to move to new owners, who will complete development of the games Senua and State of Decay 3. The changes will also affect teams at Activision, Bethesda, Blizzard, King, Mojang and Xbox Game Studios. Microsoft stresses, however, that all previously announced first-party titles remain in production. The company also wants to step up support for independent creators by developing its tools and platform.
Microsoft wants to simplify the structure and rebuild Xbox
The second pillar of the restructuring will be the rebuilding of the Xbox organisation itself. Microsoft plans to reduce the number of management levels to a maximum of five, and where possible even to three. The company also intends to halve spending on external vendors and simplify the software development process. A new chief operating officer role responsible for the entire Xbox business will be created. Helen Chiang, previously involved with the Minecraft brand among others, will take on the role. Microsoft expects the new management to allow faster decision-making and better use of available resources. At the same time, the company says that despite the difficult changes it will continue to invest in platform development and new games. The goal remains a return to growth in 2027 and further building Xbox into one of the world’s largest gaming platforms. According to management, the restructuring is meant to lay the foundation for the next decade of the brand’s development.
Microsoft is starting the biggest restructuring in Xbox's history. Job cuts, studio changes and a new management model aim to improve the company's performance and prepare the platform for the years ahead, while maintaining all announced first-party games.
source: Xbox
