GoKawiilMicrosoft's gaming division, Xbox, will eliminate approximately 3,200 jobs over its 2027 fiscal year in an attempt to turn around its floundering business. The cuts include offloading four studios with plans to spin off another, though no announced first-party games are being canceled.
Around 1,600 of those jobs are being eliminated today, and the rest will occur throughout the rest of the year.
"We are operating at margins that are 3-10x lower than comparable platform and publishing businesses," Xbox CEO Asha Sharma wrote in a note to Xbox employees, pointing out that investments in studios and Game Pass did not add as much value as expected. She wrote that the business typically loses 64 cents for every dollar invested. "As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX." She wrote that she has a goal for Xbox to reach more than a billion people per day.
Xbox is selling Compulsion Games (South of Midnight) and Double Fine (Psychonauts, Kiln), back to their management as independent studios, along with their catalogs, intellectual property, and funding for their next games.
Meanwhile, Ninja Theory and Undead Labs are being sold to unidentified "new ownership" and will continue to work on Senua and State of Decay 3 with Xbox, respectively.
The fifth studio, Arkane, is entering consultation to review options due to France's strict labor laws. The company is currently working on Marvel's Blade and previously worked on Redfall and Deathloop.
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