Microsoft prepares new wave of layoffs and studio consolidations at Xbox

Microsoft is expected to reveal a new round of job cuts in its Xbox division, targeting hundreds of staff members later today. This follows a July announcement by Xbox chief Asha Sharma to remove 1,600 positions by year-end, on top of a prior 1,600-role reduction. The company also plans to merge several of its game studios after selling four subsidiaries earlier in the year.

Sharma’s restructuring aims to improve the gaming unit’s profit margins, which have lagged behind rivals, by concentrating on flagship franchises like Elder Scrolls and Fallout and scaling back smaller acquisitions. Microsoft CEO Satya Nadella and CFO Amy Hood have recently reaffirmed support for Sharma’s plan after earlier talks of possibly separating Xbox from Microsoft. The broader strategy includes a four-point plan to strengthen the console platform, expand global franchises, turn Minecraft into a creator hub, and extend existing game worlds by fiscal year 2027.