Xbox Braces for Layoffs with Warning of Impending ‘Reset’

Microsoft’s Xbox Division Facing Significant Layoffs

Reports indicate that Microsoft’s Xbox division is set to undergo major layoffs in the coming month, as sources familiar with the company’s plans suggest. The internal preparations for these layoffs have been ongoing for weeks, with Xbox CEO Asha Sharma hinting at tough decisions ahead in a recent statement.

Speculations point towards the possibility of studio closures or changes to the Xbox studio lineup as part of the impending cuts. Rumors have even surfaced about as many as 1,000 job losses in Microsoft’s Xbox division. A recent report from Bloomberg emphasized the scale of these layoffs, indicating significant budget cuts across marketing and other sectors of Microsoft’s Xbox business.

Shortly before the Bloomberg report, Xbox CEO Asha Sharma and chief content officer Matt Booty issued a memo to Xbox employees, warning of an upcoming “Xbox reset” in the next 100 days. They highlighted the challenges faced by the business, noting a significant decline in revenue despite substantial investments in content, platform, and hardware over the past five years.

Sharma and Booty also addressed the hardware component crisis, pointing out the escalating costs expected for the 2027 holiday season. They stressed the need for a new business model and partnerships in the hardware sector to navigate these challenges effectively.

The leadership team at Xbox has hinted at exploring innovative console business models, including potential partnerships for hardware development. They emphasized the importance of evolving the platform infrastructure to stay competitive in the evolving gaming landscape.

Under Sharma’s leadership, Xbox has already made strategic decisions, such as securing exclusivity deals for popular titles like Gears of War: E-Day and Clockwork Revolution on the Xbox console.