Xbox slashes 3,200 jobs amid studio shake-up to boost margins
Microsoft’s Xbox division is undergoing a sweeping restructuring, cutting 3,200 jobs this fiscal year while divesting or restructuring five studios in a bid to improve sagging profitability. The move follows CEO Asha Sharma’s admission that the division operates at margins 3 to 10 times lower than comparable platform and publishing businesses, with losses averaging 64 cents per dollar invested. Around 1,600 positions are being eliminated immediately, with the remainder phased in over the coming months.
A strategic pivot toward core franchises
Xbox is refocusing its first-party studios on established, high-impact titles. Reports indicate Bethesda’s ZeniMax will concentrate resources on marquee franchises like Fallout, Doom, and The Elder Scrolls, signaling a shift away from broader experimentation. Meanwhile, Mojang and King, already pillars of the ecosystem with massive monthly active player bases, will report directly to Sharma, underscoring their strategic importance in Xbox’s global growth plans.
Studios face uncertain futures
Four studios are being divested entirely—Compulsion Games, Double Fine, Ninja Theory, and Undead Labs—while Arkane’s future hangs in the balance due to France’s labor regulations. Compulsion and Double Fine will return to independent ownership, retaining their IP and funding for new projects. Ninja Theory and Undead Labs are being sold to new owners but will continue developing Senua’s Saga and State of Decay 3, respectively, under ongoing partnerships with Xbox. Arkane, currently developing Marvel’s Blade, is entering consultations to explore structural options.
Leadership and operational overhaul
To streamline decision-making, Xbox has appointed Helen Chiang as its first-ever chief operating officer, tasked with improving end-to-end profitability across content, hardware, and services. Sharma emphasized that the changes aim to position Xbox for a “bigger future,” not retrenchment, while committing to continued investment—albeit with tighter discipline. The brand will also revert to its all-caps “XBOX” logo and double down on console exclusives like Gears of War: E-Day, reflecting a more focused strategy in a competitive market.
Source: Tom's Hardware. AI-assisted editorial synthesis — TechnoExpress.