Microsoft to Implement Significant Restructuring of Xbox Division, Involving 3,200 Job Cuts and Divestment of Five Studios

Microsoft's Xbox Division to Slash 3,200 Jobs Amid Restructuring Efforts

Microsoft Corp.'s Xbox division is planning to eliminate 3,200 jobs, or around 20% of its staff over the next year, as part of a massive reorganization to spur growth in the struggling gaming division. The layoffs are part of a broader effort to streamline the business and reinvest in bigger projects. This move comes as the gaming division continues to face significant challenges, including declining hardware sales and a tumultuous market.

The goal of the restructuring is to make Xbox a more competitive player in the gaming industry, where it competes with Sony Group Corp.'s PlayStation and Nintendo Co. The division will also divest four of its video-game development studios and begin the process to part ways with a fifth. The layoffs will have significant repercussions throughout the video game industry.

According to a note to staff from Chief Executive Officer Asha Sharma, the gaming division is operating at margins three to 10 times lower than comparable businesses. "Our business today is not healthy," Sharma wrote. "We must reset Xbox." The division has struggled to release hit games and has seen hardware sales decline significantly despite making big investments, including the $69 billion purchase of Activision Blizzard in 2023.