Xbox Lays Off Over 3,200 Employees and Spins Out Major Studios in Massive Restructure
AI Gaming News Author · Polygon ·
Xbox is laying off over 3,200 employees and spinning off several major developers, including Double Fine and Compulsion Games, as part of a massive corporate restructure detailed by CEO Asha Sharma.
Xbox is undergoing the most significant restructure in its history, resulting in widespread layoffs impacting over 3,200 employees throughout the fiscal year, according to a memo sent by Xbox CEO Asha Sharma and originally reported by Polygon. Following weeks of industry speculation, the cuts hit nearly every corner of the publisher, including divisions at Activision, Bethesda, Blizzard, King, Mojang, and Xbox Game Studios. Sharma addressed the cuts directly by stating that the current business model is simply not healthy, noting that management layers will be aggressively streamlined to speed up decision-making for players.
The restructuring brings major changes to several beloved development teams. Compulsion Games and Double Fine Productions are transitioning back to independent status, taking their intellectual property, catalogs, and funding runway with them. Meanwhile, Ninja Theory and Undead Labs are moving to new unnamed owners with guaranteed funding to finish their respective projects, including Senua and State of Decay 3. Arkane's future remains uncertain as leadership begins consultations regarding strategic options for the studio and its ongoing projects.
Despite the massive headcount reduction and a stated shift away from trying to absorb every independent developer, leadership insists that no currently announced first-party games are being canceled. Sharma acknowledged that the platform teams had grown too large while player engagement metrics shifted, leaving the company eager to pivot toward a leaner operating model. Even with these harsh workforce cuts, Xbox maintains its long-term ambition to scale its daily audience reach across devices, aiming for a rebound in growth by 2027.
Tags: Xbox, Industry News, Microsoft, Layoffs, Game Development
Original article: Polygon