Xbox Reportedly Plans Major Layoffs Amid Revenue Pressure

Microsoft's Xbox gaming division is reportedly gearing up for a substantial wave of layoffs, expected to commence next month. This initiative is described as a key step in the organizational restructuring being driven by the division's new CEO, Asha Sharma.

Sources familiar with Xbox's strategy indicate that the scale of the impending job cuts remains unclear. However, the layoffs are anticipated to occur shortly after Microsoft's fiscal year concludes on June 30. In addition to personnel reductions, Xbox is planning significant cuts to marketing and other operational expenditures. These measures are intended to counteract declining revenues and boost profitability.

Xbox, once a dominant force in the gaming industry, has experienced a notable slowdown in growth momentum in recent years. Sales of its hardware have seen a considerable decline, and the company has struggled to consistently release hit game titles. Furthermore, the growth of its subscription service, Game Pass, has gradually plateaued. Under pressure from its parent company to improve financial performance, Xbox has previously closed studios, canceled game development projects, and increased prices for some products over the past two years.

Since taking the helm in February, CEO Asha Sharma has been actively pursuing reforms. She recently acknowledged at the Bloomberg Tech conference that Xbox's current operational status is "not healthy." Sharma outlined plans to reorganize the business and adjust its development direction. Beyond business restructuring, Xbox is also confronting the challenge of escalating hardware costs. Sharma estimates that by the end of 2027, the company's expenses for storage and memory components could be five times higher than in 2024. Consequently, the hardware strategy and business model for the next-generation console, codenamed 'Helix,' require careful reconsideration. Sharma believes that amid continuously rising component costs, Xbox must explore new business models and partnerships to maintain the competitiveness of its future hardware business.

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Xbox's current operational status is 'not healthy.'