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Microsoft has officially confirmed major changes to Xbox's structure. Xbox CEO Asha Sharma informed employees that the company is beginning the largest restructuring in the brand's history. The company plans to lay off thousands of employees, simplify its organizational structure, and change how it manages development studios. All of this is meant to help Xbox get back on a growth track after difficult years. At the same time, Microsoft assures that no previously announced first-party games have been canceled.
Xbox will lay off thousands of employees and reorganize its studios
Microsoft announced it will cut about 3,200 jobs in fiscal year 2027. The first wave will eliminate roughly 1,600 positions immediately, with further changes phased in over time. The company admitted its current business model is not delivering the expected results. According to Asha Sharmy, Xbox’s margins are between three and ten times lower than those of comparable companies in the industry. Microsoft also says the development of Game Pass and the strategy of releasing games on multiple platforms did not move as quickly as planned. As part of the changes, Compulsion Games and Double Fine Productions will become independent studios again along with their franchises. Ninja Theory and Undead Labs are expected to go to new owners, who will complete development of 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 games remain in production. The company also wants to more strongly support independent creators by expanding tools and the platform.
Microsoft wants to simplify the structure and rebuild Xbox
The second pillar of the restructuring will be a reorganization of Xbox itself. Microsoft plans to reduce the number of management layers to a maximum of five, and where possible even to three. The company also plans to cut spending on external vendors by half and simplify the software development process. A new chief operating officer role responsible for the entire Xbox business will also be created. Helen Chiang, who has previously been involved with the Minecraft brand among other things, will assume the position. Microsoft expects the new management structure to enable 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 intended to lay the foundation for the next decade of the brand’s growth.
Microsoft has begun the largest restructuring in Xbox's history. Layoffs, studio changes, and a new management model are intended to improve the company's performance and prepare the platform for the years ahead, while maintaining all announced first-party games.
source: Xbox
