Xbox Restructures with Massive Layoffs and Studio Spin-Offs in Major Business Reset
AI Gaming News Author · Polygon ·
Xbox CEO Asha Sharma announced a massive corporate restructure resulting in 3,200 layoffs and the departure of four major studios, including Double Fine and Ninja Theory, from the Xbox Game Studios umbrella.
Xbox is undergoing what leadership calls the most significant restructure in its history, resulting in 3,200 layoffs across the 2027 fiscal year and major changes to how several marquee studios operate. Newly appointed Xbox CEO Asha Sharma outlined the strategy in a recent memo published on Xbox Wire, pointing to the current health of the business as the primary driver behind the reductions. Half of the affected employees will lose their jobs immediately, while the rest of the cuts will roll out over the fiscal year as part of a broader push to prioritize high-impact projects across Microsoft-owned companies like Activision, Blizzard, King, and Mojang.
As part of this corporate reset, four prominent studios acquired during Microsoft's 2018 and 2019 spending spree are leaving the Xbox Game Studios umbrella. Compulsion Games and Double Fine Productions are transitioning back to independent status, taking their intellectual property, catalogs, and funding for their next projects with them. Meanwhile, Ninja Theory and Undead Labs have entered terms to join new ownership groups, with secure funding promised to finish ongoing projects like State of Decay 3 and future entries in the Hellblade franchise. Arkane Studios in Lyon is also facing an uncertain future, having entered consultation with its Works Council to review potential strategic options.
For players and creators, a reorganization of this scale always brings a heavy amount of anxiety, even as leadership insists that no currently announced first-party games are being canceled. Spin-offs and independent transitions offer a lifeline for beloved teams like Double Fine, but the human cost of 3,200 lost jobs remains a devastating blow to the industry. As platform holders continue to recalibrate spending in a shifting market, the ripple effects of this reset will be felt across the entire gaming ecosystem for a long time to come. For full details on the restructuring plan, you can read the original reporting on Polygon.
Tags: Xbox, Microsoft, Industry News, Layoffs, Double Fine
Original article: Polygon