Microsoft is cutting 4,800 jobs, about 2.1% of its global workforce, and Xbox will absorb a large share of the reduction.
The company laid off 1,600 Xbox workers on Monday, July 6. It expects to lay off another 1,600 later this fiscal year, bringing total Xbox jobs to approximately 3,200.
Xbox CEO points to margin gap
Xbox CEO Asha Sharma took over the gaming unit in February following the retirement of Phil Spencer. She told employees that the department’s economics were no longer holding up.
“Our actions today are not healthy.”
Asha Sharma, Xbox
Xbox’s margins are three to 10 times lower than similar platforms and publishing companies, Sharma said. she Blame The hardware crisis has worsened as console component costs have risen, intensifying competition with Sony’s PlayStation and Nintendo Switch.
Sony also plans to finish Physical disc production in January 2028. This shift reflects a broader industry pivot toward digital distribution that Xbox appears to be following.
Microsoft is also spinning off four studios it once acquired. Compulsion Games and Double Fine Productions will become independent, while Ninja Theory and Undead Labs will transition to new owners.
These moves unbundle part of the Activision Blizzard portfolio that Microsoft built with $69 billion. deal Three years ago.
Follow-up acquisition program discounts
Chief People Officer Amy Coleman He said Rapidly changing technology drove the decision. She noted that Microsoft offered buyouts in April, and more than a third of eligible employees accepted them.
The reduction follows a broader trend. Technology and finance jobs declined At a steady monthly pace in 2026 as companies move more towards artificial intelligence.
Gaming is resetting as Microsoft shares are down nearly 19% over the past six months. Investors are weighing whether big spending on artificial intelligence is paying off amid this Broader pressure on technology stocks.
Xbox’s restructuring continues through fiscal year 2027. This leaves the door open as to how much the division will shrink before Sharma is repositioned.
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