Microsoft announces 4,800 job cuts amid Xbox restructuring

The cuts include the most drastic overhaul in Xbox history, with the elimination of about 3,200 video game jobs during the next fiscal year, the separation or sale of four game development studios and the beginning of a review process for a fifth, which could lead to its closure, the company said.

Microsoft has announced several layoff plans in recent months, amid its heavy investments in the development of artificial intelligence (AI).

“Our business is changing because the world around it is changing,” Microsoft executive vice president Amy Coleman wrote in a letter to all employees.

“Companies can’t choose whether their industry changes; they can only choose whether they change with it,” Coleman added, noting that the layoffs primarily affect Microsoft’s commercial business and the Xbox division.

The vice president stated that the functions that those dismissed had will not be performed by AI, but recognized that this technology causes changes in the way of working throughout the company.

In the commercial field, he noted that the cuts will be added to Microsoft’s $2.5 billion investment, announced last week, to integrate 6,000 engineers into the companies they have as clients in order to extend the use of AI among companies that are reluctant to adopt this technology.

Xbox CEO Asha Sharma informed its employees that 1,600 jobs will be eliminated immediatelyand that the rest will leave the company during fiscal year 2027.

Xbox has suffered several cut programs since Microsoft’s $68.7 billion acquisition of Activision Blizzard closed in 2024.

Sharma described Xbox’s business as “unhealthy,” with profit margins “between 3 and 10 times lower” than those of the competition.

Four studios will leave the Microsoft division as part of the restructuring.

Compulsion Games and Double Fine Productions will become independent, retaining their intellectual property and video game catalogues.

Ninja Theory and Undead Labs have reached an agreement to join new owners.

In France, Arkane management is launching a mandatory consultation with its works council to analyze what Sharma called “possible strategic options,” a process that could lead to the company’s closure or sale.