While a recent report indicated that Microsoft might be getting ready for a round of layoffs across its Xbox division, a new report by Tom Warren of The Verge indicates that these layoffs might be accompanied by the closure of a studio. The report doesn’t reveal too many details, however, indicating that the decision is still in its planning stages for now. However, changes to the Xbox Game Studios lineup seem like a major possibility.
Warren’s report comes shortly after Bloomberg’s Jason Schreier reported that the company is planning to undergo major layoffs in July. According to Schreier, this is Xbox CEO Asha Sharma’s attempt at mitigating the revenue losses that the division will be reporting at the end of its fiscal year on June 30th. Along with job cuts, spending across various divisions, including marketing, will also be slashed. Xbox itself hasn’t made any comment about the report at the time of publishing.
These reports about layoffs come just after Asha Sharma, along with CCO Matt Booty, published a post about the company’s plans moving forward, celebrating 100 days of the division’s new leadership. In the post, Sharma and Booty noted that the Xbox division will be reporting a 3 percent loss in its accountability margin over the previous year.
“We will end this fiscal year at about a 3 percent accountability margin, down year-over-year,” they wrote. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
Looking to the future, Sharma and Booty also spoke about hardware plans going forward. They brought up the fact that component prices have shot up quite drastically over the last few months, with Sharma noting that storage prices were twice as high by the time she became CEO as they were in Fall 2025. She also wrote about how, by the time the company gets ready for the 2027 holiday season, the prices will have been multiplied by 5. This means that for Project Helix, Xbox will need to figure out a new business model.
“We are in a hardware component crisis,” wrote Sharma. “When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.”
