Xbox to cut 3200 jobs and sell four game studios, says Asha Sharma
Microsoft's gaming division, Xbox, announced it will cut roughly 3200 employees, about 20% of its staff, as part of a sweeping reorganization. The company is also selling four game studios and has started the process of parting ways with a fifth. Xbox CEO Asha Sharma told employees that the business is "not healthy today" and that the division's margins are 3-10 times lower than those of comparable companies. The decision was announced on Monday, July 6, 2026.
AI-processed from Bloomberg Tech; edited by Hamidun News
On July 6, 2026, Xbox, Microsoft's gaming division, announced it will cut about 3200 employees, or roughly 20% of its staff, in a sweeping reorganization driven by the gaming business's weak performance. At the same time, the company is selling four game studios and has begun the process of parting ways with a fifth.
What the Xbox chief said
In a memo sent to employees on the morning of Monday, July 6, 2026, Xbox CEO Asha Sharma wrote: "Our business is not healthy today." She said the division operates at margins three to ten times lower than those of comparable companies in the industry. That diagnosis shaped the task she set for the team: "We have to reboot Xbox."
"Our business is not healthy today," —
Asha Sharma, CEO of Xbox, in a memo to employees on July 6, 2026.
- The cuts will affect about 3200 people, roughly 20% of Xbox's staff
- The reorganization was announced on July 6, 2026
- The company is selling four game studios and preparing to part ways with a fifth
- According to Sharma, the division's margins are 3-10 times lower than those of comparable companies
What happens to the studios?
On top of the layoffs, Xbox is selling off part of its studio lineup: four video game development studios are moving to new owners or shutting down, and the company has already started the process of parting ways with a fifth. Formally, this is part of the same reorganization that Sharma frames as a response to the gaming business's weak financial results. The headcount cuts are running in parallel with a shrinking portfolio of first-party studios.
Technology reporter Brody Ford discussed the news on Bloomberg TV with hosts Paul Sweeney and Scarlet Fu. They noted that the restructuring goes beyond headcount and reaches the entire structure of Microsoft's gaming business.
What it means
Xbox remains a major player in consoles and game subscription services. But the CEO's public admission of unhealthy margins, combined with the decision to cut a fifth of the staff and sell studios, signals that Microsoft is ready to cut costs in gaming as aggressively as it does in other non-core businesses. Rather than making targeted adjustments, the company is rebuilding the division's structure itself.
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Key Questions Answered
What happens to the studios?
On top of the layoffs, Xbox is selling off part of its studio lineup: four video game development studios are moving to new owners or shutting down, and the company has already started the process of parting ways with a fifth. Formally, this is part of the same reorganization that Sharma frames as a response to the gaming business's weak financial results. The headcount cuts are running in parallel with a shrinking portfolio of first-party studios. Technology reporter Brody Ford discussed the news on Bloomberg TV with hosts Paul Sweeney and Scarlet Fu. They noted that the r
What the Xbox chief said?
In a memo sent to employees on the morning of Monday, July 6, 2026, Xbox CEO Asha Sharma wrote: "Our business is not healthy today." She said the division operates at margins three to ten times lower than those of comparable companies in the industry. That diagnosis shaped the task she set for the team: "We have to reboot Xbox." "Our business is not healthy today," — Asha Sharma, CEO of Xbox, in a memo to employees on July 6, 2026. The cuts will affect about 3200 people, roughly 20% of Xbox's staff The reorganization was announced on July 6, 2026 The company is selling four
What it means?
Xbox remains a major player in consoles and game subscription services. But the CEO's public admission of unhealthy margins, combined with the decision to cut a fifth of the staff and sell studios, signals that Microsoft is ready to cut costs in gaming as aggressively as it does in other non-core businesses. Rather than making targeted adjustments, the company is rebuilding the division's structure itself.
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