The axe is falling. Again.
Xbox just fired 1,600 people on a Monday morning. Asha Sharma, the new CEO of the division, dropped the memo. More cuts are coming. By June 2027 the count could hit 3,200. It’s part of Microsoft’s wider shakeup, slashing 2.1% of their entire global workforce—roughly 4,800 jobs gone in total. But Xbox takes the biggest bruising.
Why? Sharma says the business is “not healthy.” Costs are bleeding the budget dry. The player base? Stagnant. Game Pass, that shiny subscription key meant to lock in users, hasn’t grown fast enough. So here’s the plan: burn it down. Start over.
Selling Off the Kids
It’s not just headcounts disappearing. Studios are being tossed out like unwanted luggage.
Compulsion Games, Double Fine, Nina Theory, and Undead Labs? All for sale. Or already sold to outside management. They were all acquisitions from the last eight years, bought when Microsoft had infinite cash and a desire for IP. Arkane Studios in France? Likely next on the block.
Sharma calls this a reset. Analysts call it panic.
Jason Schreier from Bloomberg broke down how things got here in a video that sounds less like a business case study and more like a tragedy. He argues this isn’t an accident. It’s the result of shifting priorities for a decade straight. Microsoft tried to be everything—hardware, software, services, massive publishers. And it got bloated.
Then came the Activision Blizzard buyout. $68.7 billion. The most expensive video game deal in history. Since October 2023? Nothing but cancellations and layoffs. The growth stopped. The money ran out. Or at least, the tolerance for it did.
“No one is safe. No matter how much you contribute… nothing matters more than cutting until there’s nothing left.”
— Mike Futter
A Platform in Decline
Let’s look at the numbers. Xbox dominated the US in the Xbox 360 days. They were kings. Then came the current generation.
PlayStation owns half the global market. Nintendo’s Switch takes another 27%. Xbox sits at a paltry 23%.
It’s a humiliating slide from number one to also-ran. And now, with this restructuring, they’re digging the hole deeper. Industry analysts Amanda Farough and Mike Futter think this is self-sabotage. They see a message in the noise: Do not buy Xbox.
Why? Because selling your core creative talent makes you a weaker player. Or worse, it makes Microsoft look like they are prepping the company to be bought itself. Either way, the talent pool evaporates. 8,300 gaming jobs lost so far this year. Already twice the total of 2024.
Developers are terrified. Creatives are angry. Gamers? They’re confused.
The Trust Is Broken
Reddit threads are lighting up. Fans mock the “buy-and-bury” cycle. They call it corporate hypocrisy. Some call it the tech industry “circle of life.” You buy the studio for prestige, wait five years, realize it doesn’t make billions in day one, then you cut it.
Max Shockley, a reviewer with 250k subscribers, says the ship has sailed. He argues the games are already coming out buggy. Cutting staff won’t polish the product. It’ll just break it.
His prediction for the next-gen console, code-named Project Helix? It might not happen. Or someone else might build it for them. “Xbox tried to fly with wings made of ice,” Shockley says. “And they melted before reaching the top.”
David Lumb from CNET puts it bluntly. It is “ghoulish.” You can’t ask for a billion daily active players while dismantling the very people making the entertainment for those players.
What’s Left Standing
So what happens next?
Sharma claims all publicly announced games are safe. You’ll still get State of Decay 3. The next Ninja Theory project is secured by the new owners. The big publishers like Bethesda and Blizzard remain intact. For now.
But the trust is gone. The studios are being sold off piece by piece. The culture is shredded.
Xbox isn’t dead yet. But it looks a lot like a ghost town.
