Microsoft slashes 3,200 jobs in Xbox gaming division, citing unhealthy business

Microsoft is undertaking a significant restructuring of its Xbox gaming division, announcing the elimination of approximately 3,200 jobs. This move affects about one-fifth of the division's workforce and marks what Xbox head Asha Sharma described as "the most significant restructuring in Xbox history."

In an internal email to employees, Sharma candidly stated that the business is "not healthy." She attributed this to a complex organizational structure with numerous management layers that hinder efficient decision-making. Following this "reset," the company plans to reduce management levels to between three and five. Initially, 1,600 positions will be cut immediately, with the remaining layoffs to occur within the next twelve months.

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Our business is not healthy today.

Alongside the job cuts, four game development studios will be closed. Sharma pointed to a decline in player numbers and engagement on the Xbox platform in recent years as a key factor driving these changes. This follows earlier significant layoffs at Microsoft after its acquisition of Activision Blizzard for nearly $69 billion in late 2023.

Despite the drastic measures, Sharma expressed a forward-looking vision, aiming to foster future growth for the Xbox business. The ultimate goal is to expand the platform's reach to over one billion daily users. The restructuring aims to streamline operations and refocus efforts on achieving this ambitious target.

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This is the most significant restructuring in Xbox history.