Microsoft cut 3200 jobs at Xbox on July 6 as part of the largest restructuring in the division's history. Half the reductions took effect immediately, with the rest scheduled through June 2027. Four studios are leaving the company through spin-offs or sales.
Xbox CEO Asha Sharma described the changes as a reset to focus resources on higher-priority projects. The company will shed Compulsion Games and Double Fine as independent studios that retain ownership of their games and intellectual property. Ninja Theory and Undead Labs will move to new owners with funding to complete Senua and State of Decay 3.
Obsidian Entertainment lost 60 to 70 employees, roughly one-quarter of its staff, including producers, artists, designers, and writers. Work on Grounded 2 and The Outer Worlds 2 DLC is expected to continue. ZeniMax Online Studios also faced deep cuts that may affect nearly half its team.
Sharma said Xbox aims to entertain more than a billion people daily and return to growth in 2027. No publicly announced games have been canceled. Arkane Lyon began required consultations with its works council over potential strategic options.
