Xbox Reportedly Preparing More Layoffs as Major Restructuring Continues
Xbox may be heading into another difficult stretch as Microsoft’s gaming division continues its broad restructuring effort. Xbox CEO Asha Sharma is reportedly preparing three additional rounds of layoffs, with cuts expected to take place in October, November, and January.
The reported job cuts would add to an already significant wave of reductions across Microsoft’s gaming business. In July, Sharma announced plans to eliminate 3,200 positions during Microsoft’s 2027 fiscal year as part of what was described as an organizational reset. That announcement included 1,600 immediate layoffs, followed by around 260 additional cuts in September.
It remains unclear how many employees could be affected in the next three rounds or whether the upcoming cuts are part of the previously announced total. Microsoft has not publicly confirmed the details of the reported layoff schedule.
Sharma, who took over Xbox leadership in February 2026, has been pushing to reshape the division around a more focused business strategy. Her approach appears centered on improving profitability, reducing costs, and prioritizing projects with stronger commercial potential.
The changes have already had a major impact on Xbox Game Studios and related teams. Double Fine and Compulsion Games have reportedly been allowed to return to independent status, while Ninja Theory, known for the Senua series, may be at risk of closure. The company is also said to be placing greater emphasis on proven franchises and games with clearer paths to financial success.
The restructuring comes at a challenging time for Xbox. The division has faced growing pressure to deliver stronger returns after years of major investment, studio acquisitions, and expansion across console, PC, and subscription gaming. Rising hardware costs and uneven performance from some recent initiatives have added to the pressure.
In a previous internal message to employees, Sharma reportedly described the Xbox business as unhealthy, suggesting that past strategies had not produced the level of growth Microsoft expected. That message helped set the stage for a deeper reset across the gaming division.
For Xbox employees, the possibility of three more layoff rounds creates more uncertainty after months of disruption. Studios, teams, and long-running projects may continue to face review as leadership works to streamline the business.
While the reported cuts are not yet officially confirmed, they point to a continued shift in Microsoft’s gaming strategy. Xbox appears to be moving away from aggressive expansion and toward a leaner model focused on financial discipline, established brands, and projects with a higher chance of commercial success.
