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[Magic-DEI-Hire]

Microsoft is cutting its gaming workforce by 1,600 workers today, with another 1,600 slated for cuts across the duration of the company's fiscal year, ending on June 30, 2027.

Sharma framed the cuts as a "painful" way to address an Xbox business she describes as "not healthy."

Cuts at Microsoft's vast network of studios will range in size, from relatively small at many Activision studios to large ones at other studios, according to a source familiar with Microsoft's plans.

Two massive cutbacks speak to Microsoft's changing strategy, as Sharma breaks from the approach of the preceding leadership team by divesting of many of Xbox's smaller development teams and as it shrinks the core Xbox platform group as well.

Those studio spin-outs will account for more than 300 jobs leaving the Microsoft gaming team, per the source familiar with today's moves.

Microsoft's platform team, encompassing hardware, marketing, Game Pass, is getting a substantial layoff.

"Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined," Sharma said today.

The plan here is for Xbox to proceed with a smaller team, though just how much a group like that can be cut and still function effectively remains to be seen.

Sharma said today that the platform team, in some cases, has 14 layers of management, which will be reduced to no more than five. That kind of metric suggests prior bloat, but the public has seen tech CEOs confidently slash allegedly oversized teams deeply before. The wisdom or folly of doing so is often quickly borne out in its impact on the product.

Today, in explaining the cuts, she described a past strategy that did not his its growth targets and that has run smack into the reality of skyrocketing hardware costs that are causing hardware prices to spike at game companies and beyond.

The logic of Sharma's cuts is that Microsoft had, in her past words, "over-extended" its gaming teams. The studio spin-offs are an acknowledgment that the company gorged on studios it couldn't handle. Microsoft's reputation for hands-off management of its studios, for free creative rein, is being swapped for talk of focus, for mining core franchises, for raising expectations that the biggest things Microsoft could be doing in gaming is what it'll be doing.

But this focus is far from the gaming team's first contraction.

Microsoft cut 1,900 gaming jobs in early 2024 after the close of its purchase of Activision Blizzard. It cut another 650in September 2024. Did another large cut in July 2025 as part of 4% Microsoft-wide job cuts that also ended development of major announced and unannounced game projects (Perfect Dark, Everwild, Blackbird) and downsized its publishing team and their projects.

Thousands of people lost their Xbox jobs in recent years, and the assessment Sharma and her leadership team are now making is that that all wasn't enough.

That's a brutal and shocking reality for Xbox workers, who've trusted past and current leadership to steer a console-making behemoth successfully.

Xbox is now saying it won't actually reduce investment in content this year, that it's shifting its priorities to pursue the most likely avenues of success.

The '4800' number you might be seeing elsewhere accounts for additional layoffs from other areas of Microsoft as a company (ie. Outside of the Xbox division).

The 3200 layoffs number does not include the number of employees affected by studio sell-offs or agreements to go independent (Compulsion, Double Fine, Ninja Theory, Undead Labs).

Xbox to cut 20% of workforce, plans to divest of five studios

Some 3,200 jobs to be cut, platform team slashed, Xbox CEO takes direct oversight of Minecraft, Candy Crush studios

www.gamefile.news

 

[Mr. PlayStation]

Hope everyone who is affected and will be affected all land on their feet!

 

[riko]

These layoffs overtime are literal poison for an org. Morale tanks, as does productivity. People work to look better than coworkers instead of working together. It is a rookie exec mistake 101.

 

[dottme]

These layoffs overtime are literal poison for an org. Morale tanks, as does productivity. People work to look better than coworkers instead of working together. It is a rookie exec mistake 101.

I agree. And also I don't think it's layoffs based on merit but just based on saving money, so you always feel you can be the next one.

 

[Sticks]

Hope everyone who is affected and will be affected all land on their feet!

You should change your name you know

 

[dEvAnGeL]

Good lord. Imagine going to work without knowing if you are next. The work environment will be terrible.

 

[Magic-DEI-Hire]

Good lord. Imagine going to work without knowing if you are next. The work environment will be terrible.

Been through this before with a previous job and it was the single worst, stressful experience I can think of in recent memory. The worst part was being laid off despite management and HR both admitting it had nothing to do with my performance, which was always exemplary. To these companies, you're just another number on a spreadsheet, and the perfect target from incompetent management/CEOs that don't know how to effectively run a company or treat their employees with dignity.

Given the state of the economy right now, I truly hope all of the ones directly affected can find something. And for the ones still remaining, I hope they aren't suffering from the untold amount of emotional stress that I did.

 

[Angry_Megalodon]

Hope everyone who is affected and will be affected all land on their feet!

 

[PeteBull]

Hope everyone who is affected and will be affected all land on their feet!

Same, i hope all the talentless dei hires very succesfull new career path:

 

[Loomy]

These layoffs overtime are literal poison for an org. Morale tanks, as does productivity. People work to look better than coworkers instead of working together. It is a rookie exec mistake 101.

It isn't, unfortunately. It is very intentional. Exit packages are expensive. They're banking on attrition over the next 12 months.

 

[Zacfoldor]

It isn't, unfortunately. It is very intentional. Exit packages are expensive. They're banking on attrition over the next 12 months.

Smart comment. The terrible morale is how they will get people to quit. Instead of waiting till 2027 to get fired. Sounds like this may not be the end of it either. Sounds to me like for every 1 exec they have 12 redundancies. They are cutting to the bone. The people getting laid off in 2027 probably already know.

Unless you are a developer on a big game it's going to suck working at Xbox for a while.

 

[LordCBH]

Fingers crossed for 343

 

[Loomy]

Smart. The terrible morale is how they will get people to quit. Instead of waiting till 2027 to get fired. Sounds like this may not be the end of it either. Sounds to me like for every 1 exec they have 12 redundancies. They are cutting to the bone. The people getting laid off in 2027 probably already know.

Pointing out "14 layers of decision making" wasn't random.

The sad thing with Microsoft is they're going to get rid of whoever they need to get rid by June next year(either though attrition, contract buyout, retirement packages, etc), and then come first week of July, 2027, they're going to announce thousands of additional layoffs.

 

[mckmas8808]

Same, i hope all the talentless dei hires very succesfull new career path:

Why do all yall think every one of these 3,200 people are all DEI hires?

 

[S0ULZB0URNE]

4800

 

[PatientGamer]

how did we go from 3,200 to 4,800?

 

[Hyper_hyper]

Xbox to cut 20% of workforce, plans to divest of five studios

Some 3,200 jobs to be cut, platform team slashed, Xbox CEO takes direct oversight of Minecraft, Candy Crush studios

www.gamefile.news

So, 3200 people + those who are leaving as a part of studio sales

 

[Bonfires Down]

Hope everyone who is affected and will be affected all land on their feet!

Compulsion;

 

[Hyper_hyper]

how did we go from 3,200 to 4,800?

Other 1600 are outside Xbox

 

[bender]

4800

That was quick.

 

[PeteBull]

Why do all yall think every one of these 3,200 people are all DEI hires?

If they got talent and grit they will find another job in tech industry, so no worries there

 

[ChorizoPicozo]

He tag him to show him how "not ignorant" he is.

 

[reinking]

It isn't, unfortunately. It is very intentional. Exit packages are expensive. They're banking on attrition over the next 12 months.

The "retirement package" for those that did not qualify.

 

[ChorizoPicozo]

how did we go from 3,200 to 4,800?

The real numbers is higher

 

[Dacvak]

What have the GAF takes mostly been like with all of this Xbox news?

Personally, the whole bloodbath absolutely sucks, but in terms of trying to survive and regrow the brand, I think most of this was the right move. I especially like trimming down the layers of management from 14 to 3 per project.

 

[jm89]

Id software got gutted hard, like 50%.

I don't see how some of these studios survive long term with the severity of layoffs.

 

[Pantz]

What have the GAF takes mostly been like with all of this Xbox news?

Personally, the whole bloodbath absolutely sucks, but in terms of trying to survive and regrow the brand, I think most of this was the right move. I especially like trimming down the layers of management from 14 to 3 per project.

As an Xbox fan, I'm loving it. Remember when after 11 years of development, the people making Everwild still didn't know what kind of game they wanted it to be? My best hope is that they're firing all the woke activists.

 

[Dacvak]

As an Xbox fan, I'm loving it. Remember when after 11 years of development, the people making Everwild still didn't know what kind of game they wanted it to be? My best hope is that they're firing all the woke activists.

I feel like developer bloat is probably one of the biggest scourges in AA-AAA gaming right now. Our tools keep getting better, and scope for games hasn't really increased much in the last 10 years, so why the hell are teams so damn big? All it does is slow down the process.

 

[Viruz]

 

[mckmas8808]

If you take a step back, it's obvious to anybody and everyone here that Microsoft is slowly allowing Xbox to be sold off completely as a unit. Every year Xbox doesn't hit a benchmark, is a year closer to it being sold off for parts. Take the emotion out of it and you can clearly see this.

Nobody cuts over 7,000 jobs and "RESETS" this hard just to continue the business on in ways that familar. If MS has to, they'll keep selling off parts of the Xbox business until it's a shell of itself.

 

[Arsic]

You better not fire the coloured ones and the troons, Microsoft.
You made a commitment. Stick to it.

 

[Varteras]

If you take a step back, it's obvious to anybody and everyone here that Microsoft is slowly allowing Xbox to be sold off completely as a unit. Every year Xbox doesn't hit a benchmark, is a year closer to it being sold off for parts. Take the emotion out of it and you can clearly see this.

Nobody cuts over 7,000 jobs and "RESETS" this hard just to continue the business on in ways that familar. If MS has to, they'll keep selling off parts of the Xbox business until it's a shell of itself.

Yeah. I kinda get the feeling that this COULD be looked back on as the slow motion dismantling of the brand.

You look at the studios they had between Xbox Game Studios and Zenimax and compare them to where they're at now and what seems like is going to happen over the next 12 months. When Arkane goes they'll be down to half the studios that came with the Zenimax buyout. Tango, Roundhouse, Alpha Dog, and half of Arkane were already gone. Not even talking about the word we're getting that Id and Zenimax Online have been hammered.

Xbox Game Studios? The Initiative, Double Fine, Compulsion, Undead Labs, and Ninja Theory. All removed. Is Halo Studios going away if Halo really does get sent over to Activision? How much longer does Rare have? Will Turn 10 be officially folded into Playground? Is there even a good reason for World's Edge to exist? How is Inxile being justified to remain?

You see everything that is happening right now. Then you remember we still have up to 12 months of watching an equal number of layoffs play out. And we still aren't even looking at the elephant in the room. By this time next year they could initiate another layoff round. Remove even more teams.

Why? Because there is nothing between now and next July that is going to surge their revenue. They're obviously scrambling with Helix. Trying to make changes to the plan. I don't know that even these layoffs and studio thinnings will be enough. Especially if Call of Duty doesn't pick back up.

 

[asdasdasdbb]

Kinda hoping MS sells Rare (or at least it's IP) to Nintendo.

 

[Viruz]

If you take a step back, it's obvious to anybody and everyone here that Microsoft is slowly allowing Xbox to be sold off completely as a unit. Every year Xbox doesn't hit a benchmark, is a year closer to it being sold off for parts. Take the emotion out of it and you can clearly see this.

Nobody cuts over 7,000 jobs and "RESETS" this hard just to continue the business on in ways that familar. If MS has to, they'll keep selling off parts of the Xbox business until it's a shell of itself.

I agree of course and that's what the man said about this a year ago:

I have been told in clear terms that, outside of a few quarters in the 2nd half of the 360's lifecycle, the only time Xbox has operated at something resembling profitability was after ABK's earnings were integrated into their reporting.

It is not hyperbole to suggest that Xbox as a division likely would've become simply 'Microsoft Gaming' as a brand and had all of their HW positions folded over, with a handful of software studios (think Mojang tier) remaining on the studio front, had the ABK merger not gone through.

Based on the convos i've had, I think the future of Xbox overall is likely a combination of a handful of teams at the tier of Blizzard, CoD, and Minecraft, with a slow-bleed of every other team and studio slowly dying off as layoffs and budget cuts reduce everything as time marches forward.

 

[mckmas8808]

Yeah. I kinda get the feeling that this COULD be looked back on as the slow motion dismantling of the brand.

You look at the studios they had between Xbox Game Studios and Zenimax and compare them to where they're at now and what seems like is going to happen over the next 12 months. When Arkane goes they'll be down to half the studios that came with the Zenimax buyout. Tango, Roundhouse, Alpha Dog, and half of Arkane were already gone. Not even talking about the word we're getting that Id and Zenimax Online have been hammered.

Xbox Game Studios? The Initiative, Double Fine, Compulsion, Undead Labs, and Ninja Theory. All removed. Is Halo Studios going away if Halo really does get sent over to Activision? How much longer does Rare have? Will Turn 10 be officially folded into Playground? Is there even a good reason for World's Edge to exist? How is Inxile being justified to remain?

You see everything that is happening right now. Then you remember we still have up to 12 months of watching an equal number of layoffs play out. And we still aren't even looking at the elephant in the room. By this time next year they could initiate another layoff round. Remove even more teams.

Why? Because there is nothing between now and next July that is going to surge their revenue. They're obviously scrambling with Helix. Trying to make changes to the plan. I don't know that even these layoffs and studio thinnings will be enough. Especially if Call of Duty doesn't pick back up.

And the big elephant in the room is: what does Microsoft specifically do with Game Pass? If they keep putting all of their first-party games onto Game Pass day one, even at $23 a month, they will keep bleeding out money. Ultimately, that is the biggest elephant in the room that it doesn't seem like they truly know what to do with as of yet, since it generates $5 billion in revenue a year.

 

[March Climber]

Why do all yall think every one of these 3,200 people are all DEI hires?

It's cope logic.

Anyone logical can tell you this is about saving money, full stop, which means no matter if you're deemed a good xbox dev or a bad xbox dev by the internet, you can easily catch a stray bullet from these firings.

 

[Guwop]

Same, i hope all the talentless dei hires very succesfull new career path:

Speaking of talentless. Now they can go back to skipping over the over qualified people and hiring you unqualified privileged pale people.

 

[MayauMiao]

Layoff off isn't going to end this year so Bethesda and the rest need to be reminded that the clock is still ticking for next year and so forth.

The longer they take their sweet time releasing game the more it leads to even more layoffs.

 

[Varteras]

And the big elephant in the room is: what does Microsoft specifically do with Game Pass? If they keep putting all of their first-party games onto Game Pass day one, even at $23 a month, they will keep bleeding out money. Ultimately, that is the biggest elephant in the room that it doesn't seem like they truly know what to do with as of yet, since it generates $5 billion in revenue a year.

GamePass is going to decline in perceived value because Xbox is not going to be able to continue churning games with these layoffs. They already removed Call of Duty from the Day 1 availability. You look at the teams they have left and think about even more layoffs and divestments in the future. You're going to see game releases from the Xbox brand slow down. Fewer and further between.

So, even if they continue Day 1 stuff, there is going to be a much less frequent cadence of 1st party. Especially of games they can try to use as a marquee for the service. GamePass growth is still stalled. This greatly downsized Xbox team is going to be hardpressed to help sustain it. Forget growing it.

 

[PeteBull]

Speaking of talentless. Now they can go back to skipping over the over qualified people and hiring you unqualified privileged pale people.

Im not even american, bro, in my country we only had white slaves, and i argue any american no matter the race is 10x more priviledged
On safety alone u guys got border with corrupt af ruled by gangs mexico on the south and mapple syrup loving cuckhold canadians+ oceans from west and east, must be nice to never worry about ur contry sovereignty, not to mention economic priviledge and salaries many times higher too, hell u are avg earner in the US and still top1% compared to worldwide population

 

[squidilix]

No one care, not so much important than :

SONY REMOVES PLAYSTATION DISC

 

[genesisblock]

While a significant number of devs are wasted hires to begin with. This doesn't give them an out for next-gen requirements which is demand for higher, more ambitious titles. How is demoralising developers going to be the future of Xbox, let alone achieving 1 "billion" users a day?

 

[DEAD ORIGINAL]

I hope in the long run this is a good thing.

 

[Clear]

They aren't selling off shit, they are cutting off a bunch of studios - likely because they were part of the first wave of acquisitions and got the best deals wherein they got to keep their pre-MS IP. Interestingly this explains why the obvious Hellblade 3 was just announced as Senua, NT and Xbox were clearly hedging on IP ownership.

Note the wording in Sharma's tweet about "leaving Xbox" and "Returning to management". Which is interesting to say the least insofar as their management had to be (now former) Xbox employees.

Continuance on announced projects will require new contracts to be signed, as you don't just switch from first to third party as the funding and publishing need to be renegotiated

The point being, there was nothing for MS to sell, and as simply closing whole studios requires lengthy consultation procedures in UK and Europe. they have essentially just cut them loose.

So when Asha tells you that no projects have been cancelled, its technically true, because if/when they collapse it will solely be the responsibility of the newly independent and totally defunded developer.

 

[Panajev2001a]

Smart comment. The terrible morale is how they will get people to quit. Instead of waiting till 2027 to get fired. Sounds like this may not be the end of it either. Sounds to me like for every 1 exec they have 12 redundancies. They are cutting to the bone. The people getting laid off in 2027 probably already know.

Unless you are a developer on a big game it's going to suck working at Xbox for a while.

Sounds like a lot of great software will be produced this year with the "terrible morale to get another, check notes, 1,200 people to quit" and at the "if you are a dev working on a big game it will not suck"… nah, they made cut everywhere to ensure nobody feels safe. Great people working on big games are expensive.

 

[Panajev2001a]

Why do all yall think every one of these 3,200 people are all DEI hires?

Some hate DEI folks with a passion (partially helped by how antagonistic and aggressive some of these people are in the industry… like a pendulum swinging) and some just want to justify / spin what InsertXboxGamersFriendCEO is doing whatever they are doing at the moment into something positive.

 

[geary]

The "positive" side of the next 1,600 layoffs is that people can start looking for a new job now if they think they won't make the cut, and still get paid until they find something else. The first 1,600 people didn't have that chance.

 

[PeteBull]

Some hate DEI folks with a passion (partially helped by how antagonistic and aggressive some of these people are in the industry… like a pendulum swinging) and some just want to justify / spin what InsertXboxGamersFriendCEO is doing whatever they are doing at the moment into something positive.

Its very simple- DEI hire= will have hard time getting another tech industry job after being laid off from their current cozy job, if no DEI hire then 0 problem getting another job in the industry, if not gamedev then other branch of tech.
If on the other hand they cant land a job in the industry, even with much worse pay and more demanding hours- its simply coz they are not good enough for it, and thats fine, time to explore babysitter/kindergarten teacher/fastfood chain worker options instead, or if she is pretty and obedient enough- hell she can become even trophy wife of some milionaire, possibilities are there, just not high status high paid job in gamedev

 

[Mozza]

Kinda hoping MS sells Rare (or at least it's IP) to Nintendo.

I hope they don't.. People look at Rare through rose tinted glasses.

 

[Mozza]

Why do all yall think every one of these 3,200 people are all DEI hires?

Pretty sure nobody suggested these people are all DEI hires, but of course there will be an element of this due to the way modern companies hire these days.