It Has Begun: Microsoft Announces Largest Xbox Restructuring, 3200 People to Leave the Company
Some studios will gain independence.
Microsoft has officially begun a large-scale restructuring of its Xbox gaming division. Xbox CEO Asha Sharma informed employees that approximately 3200 people will leave the company as part of the reduction program by the end of fiscal year 2027.
According to preliminary data, the first wave will affect about 1500 Xbox employees. The cuts are part of a larger Microsoft optimization program, under which thousands of jobs will be eliminated across the corporation.
In a letter to employees, Sharma acknowledged that the decision was extremely difficult. She stated that the gaming division is currently under severe financial pressure.
We are embarking on the largest restructuring in Xbox's history. After careful analysis, I have made the difficult decision to reduce our team by approximately 3200 employees by the end of fiscal year 2027.
The head of Xbox also disclosed the business's financial performance, stating that under current conditions, the company is losing 64 cents for every dollar invested.
Despite the cuts, Microsoft managed to retain several internal studios by agreeing to change their ownership structure. Compulsion Games, known for South of Midnight, will once again become an independent company under its own management. Similarly, Double Fine Productions, led by Tim Schafer, will leave Xbox and continue to operate independently.
Undead Labs and Ninja Theory studios will come under the control of new publishers. However, the development of State of Decay 3 and Senua's Saga will not stop — both projects will remain in active production.
The fate of Arkane Studios remains less certain. According to available information, Microsoft is negotiating with French authorities and potential investors, trying to avoid the closure of the legendary studio that created the Dishonored series. The company also hopes to continue the development of the game Blade.
The restructuring will affect all Xbox divisions. One of the main goals will be to reduce the number of management levels to accelerate decision-making within the gaming business. In addition, King (Candy Crush) and the Minecraft team will report directly to Xbox's senior management, which should increase their competitiveness in the market.
Microsoft also intends to strengthen interaction between the remaining internal studios, focusing on the development of major gaming franchises. According to sources, Xbox management is considering more actively developing the Halo and Fallout series. In particular, it is not excluded that Obsidian Entertainment may work on a new game in the Fallout universe in the future.
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