Microsoft cuts 4,800 jobs and restructures Xbox after disappointing results

Microsoft announced on Monday the immediate elimination of 4,800 jobs, including 1,600 positions within its Xbox gaming division, as part of a restructuring plan aimed at improving the unit’s disappointing performance.

In a statement, the company said it also plans to cut an additional 1,600 Xbox jobs by the end of its 2027 fiscal year, which ends in late June 2027. This will bring the total number of eliminated positions within the division to 6,400.

The reduction of 3,200 jobs at Xbox represents about 20% of the division’s workforce. The restructuring plan also includes the closure of four game development studios and the start of procedures to shut down a fifth studio.

In a message to employees, Asha Sharma, Head of Xbox, said the division “is not in a healthy position,” stressing that a reorganization is necessary. She noted that Xbox’s profit margins are three to ten times lower than those of its competitors.

Despite major investments, including the $69 billion acquisition of Activision Blizzard in 2023, Xbox continues to struggle to release commercially successful games. The division has also experienced a significant decline in console sales amid increasingly intense competition.

Beyond Xbox, the restructuring plan includes the elimination of 3,200 additional jobs across Microsoft, mainly within its commercial teams. In an internal memo, Amy Coleman, the company’s Chief Human Resources Officer, said the measures reflect changes in product development practices and evolving customer expectations, while indicating that other business units could also be affected in the future.

At the same time, Microsoft continues to invest heavily in artificial intelligence data centers, prompting the company to reduce costs in other areas of its business. The company had already laid off around 15,000 employees in two rounds of job cuts during the previous year.