Following Xbox CEO Asha Sharma’s plans to reset the company by cutting costs to raise profitability, it looks like the 1,600 more planned layoffs will be happening relatively soon. According to Fortune, “people familiar with the plans” have indicated that the company is going to go through a fresh round of layoffs this month, followed by two more rounds in November and January.
Sharma had announced the layoff plans back in July when she also cut around 1,600 jobs across a variety of Xbox’s studios and divisions. At the time, she spoke about the company’s margins being 3-10 times lower than other comparable companies, and mentioned that Xbox had simply spread itself too thin by pursuing so many investments that ultimately didn’t end up paying off.
“As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox.”
This move was followed by another round of layoffs affecting 268 employees, and even involved some reshuffling, with the Halo franchise being handed over to Activision. Halo Studios, in the meantime, is tasked with continuing to provide ongoing support for older Halo titles like Halo Infinite and this year’s Halo: Campaign Evolved.
“Since 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined,” said Sharma. “We now find ourselves competing not only with the largest publishers, but also with smaller independent studios. It is neither possible nor desirable to own every great independent studio.
“We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested. As we reset Xbox, we will help independent creators succeed by providing open development tools and audiences to realize their vision.”
Sharma’s plans will culminate before the end of fiscal year 2027, with planned job cuts totalling up to approximately 3,200. In the meantime, reports have indicated that the recent rounds of layoffs have helped Xbox return to some semblance of growth. Noting that the company was in “freefall” following the Game Pass price hikes from last year, which led to a massive loss in subscribers, Sharma reportedly said during a recent town hall meeting that “we’ve started to return to growth.”
The move has also resulted in Xbox divesting itself of four of its studios – Undead Labs, Compulsion Games, Double Fine Productions, and Ninja Theory. The company may also be looking to spin off Arkane Lyon into an independent studio. However, no details about the studio’s fate have been revealed, at least for now.
Microsoft CEO Satya Nadella has also spoken about the recent “streamlining” that Xbox has gone through, and said that it has been “great to see”. As for the future, the company wants to “invent the right sustainable business model that allows us to deliver gaming to more and more people.”
