Microsoft Slashes 4,800 Jobs as Xbox Faces 'Most Significant Restructure' in Its History

Microsoft has confirmed it is cutting 4,800 jobs, equivalent to roughly 2.1% of its global workforce, with its Xbox gaming division set to shoulder a substantial share of the reductions.

In a memo to staff, Amy Coleman, executive vice president at Microsoft, said the company needed to concentrate on areas capable of delivering for customers in what she described as a "fast-changing industry".

Xbox Bears the Brunt

The wider cuts include more than 1,600 roles being eliminated immediately at Xbox. Asha Sharma, who recently became Xbox's chief executive, told employees the division was "beginning the most significant restructure in Xbox history".

In a note shared on X, Sharma said a further 1,600 jobs would be lost over the coming year. She also confirmed that four Xbox game development studios — Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab — would be spun off as part of the overhaul.

"These changes are about a bigger future for Xbox, not a smaller one," Sharma said. "History is full of companies that mistake longevity for inevitability. We will not be one of them."

A Company-Wide Shift

Coleman framed the wider reductions around evolving customer needs. "Companies don't get to choose whether their industry changes; they only get to choose whether they change with it," she said.

She noted that the lost roles would not be replaced by artificial intelligence, but acknowledged that "AI is changing how work gets done".

Sharma described the cuts as "painful" but argued a "reset" was necessary across Xbox's content portfolio, platform and operations. As part of the changes, she said Minecraft developer Mojang and Candy Crush developer King would now report directly to her.

Pressure Across the Gaming Sector

The announcement lands at an already turbulent moment for the gaming industry, with many studios still recovering from steep layoffs in recent years.

In 2024, Xbox cut more than 2,000 staff and closed four studios that had been acquired before its large-scale purchase of Activision-Blizzard, the maker of Call of Duty. Little more than a year later, Microsoft said it would lay off as many as 9,000 workers as it set out plans to significantly increase its multi-billion-dollar investment in AI.

Rising hardware costs have added to the strain. Firms including Microsoft have raised the prices of long-established consoles and related consumer gadgets, with many pointing to AI data centres driving up demand faster than supply can keep pace.

As Microsoft and its rivals navigate the twin pressures of AI investment and shifting consumer habits, the latest restructure underlines how deeply the gaming landscape is changing. What do you think these moves mean for the future of Xbox and the wider industry? Share this article and join the conversation.

Source: BBC Technology