Microsoft's Xbox unit plans to cut 3,200 jobs over the next year, including 1,600 on Monday, and divest up to five studios, including Ninja Theory, in a “reset”

Compulsion and Double Fine studios will become independent; Undead Labs and Ninja Theory will be sold.

Bloomberg 2026-07-06

Context & Ripple Effects

The reset follows a pattern of Xbox consolidation: closures and further-cut expectations surfaced after the Activision acquisition, while leadership recently tied a 100-day reset to a multiyear revenue decline.

Reports in June indicated that studios including Ninja Theory were exploring buybacks to avoid closure. The announced sales and spin-offs turn that contingency into a concrete reshaping of Xbox’s internal studio network.

First-order effects

Xbox will reduce its workforce by roughly 3,200 over the next year, with 1,600 departures beginning immediately, shrinking the division’s operating capacity.
Undead Labs and Ninja Theory will move toward sale, while Compulsion and Double Fine become independent, removing those teams from Xbox’s owned-studio portfolio.

Second-order effects

The divested teams must secure new ownership, financing, and publishing arrangements; their game roadmaps and platform commitments may be reassessed outside Xbox.
Xbox’s remaining studios face a more concentrated mandate around titles deemed high-impact, while potential buyers gain opportunities to acquire established development teams rather than build them internally.

Third-order effects

If this reset persists, large game-platform owners may rely on a smaller core of internally controlled franchises while treating more development capacity as externally financed or independently operated.
The pattern underscores the integration pressure following major games-industry acquisitions: portfolio scale can increase scrutiny of studio overlap, costs, and the strategic value of each team.

The trend: Xbox’s reset is part of a broader shift from expanding first-party studio portfolios toward tighter portfolio management and selective externalization of development teams.

Discussion

XBOX Wire XBOX Wire on x
Resetting XBOX — This message was just sent to Team XBOX employees globally. — Team,
Pure Xbox Fraser Gilbert on x
Xbox Announces 3,200 Job Losses And Four Studio Departures
@asha_shar Asha on x
This is an important email I sent today to all employees at XBOX: Team, We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include
@knoebelbroet Knoebel on x
Double Fine and Compulsion get their IP, catalog, and runway for their next games. Mojang and King will now report directly to Asha Sharma. https://news.xbox.com/... [image]
@zacbowden Zac Bowden on x
I keep seeing people ask why people are saying the Xbox business is unhealthy, when a year ago they were reporting record profits. Well, it's because Microsoft keeps saying the business is unhealthy. If they are openly telling us that it's unhealthy, it must be in bad shape.
@bdsams Brad Sams on x
Xbox is cutting 3200 employees Compulsion Games and Double Fine Productions will return to management and transition to independent studios Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay
@jasonschreier Jason Schreier on bluesky
Even now there's misinformation floating around, so let me make this clear: Xbox is cutting 3,200 jobs, or 20% of the organization. 1,600 jobs will be eliminated today, and then another 1,600 (including the studio divestments) in the next 12 months. — Full story: www.bloomberg…
@jasonschreier Jason Schreier on bluesky
ZeniMax will be impacted significantly by the reorganization but will NOT be reduced to only Fallout and The Elder Scrolls, despite rumors over the last few weeks. The publisher will also still work on Wolfenstein, Doom and Quake.
@mattmday Matt Day on bluesky
Layoffs at Microsoft today, falling heavily on Xbox, which is cutting ties with five game studios as part of a “reset” of the business: www.bloomberg.com/news/article...
@jasonschreier Jason Schreier on bluesky
BREAKING: Xbox will cut 3,200 jobs as part of a major reorganization, and divest from five studios: — Compulsion and Double Fine will go indie — Ninja Theory and Undead Labs will be sold — Arkane to enter consultation process — Here's the full story: www.bloomberg.com/news/a…
@tomwarren.co.uk Tom Warren on bluesky
BREAKING: Microsoft is laying off 4,800 employees today. Most of the job losses are in Microsoft's Xbox and commercial sales organizations. Details 👇 www.theverge.com/news/961528/ ...
r/gaming r on reddit
Microsoft is laying off 4,800 employees
r/Games r on reddit
Microsoft is laying off 4,800 employees
r/xbox r on reddit
Microsoft is laying off 4,800 employees
@compulsiongames @compulsiongames on x
An important update from Compulsion Games. [image]
@thetranscript_ @thetranscript_ on x
$MSFT Xbox CEO: “Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a
@rohankarmoon RohanKar on x
MY HEART LITERALLY CAME NEAR MY THROAT WHEN I SAW THE NEWS but im so relieved that compulsion and double fine are not getting shut down and instead going full on indie like toys for bob. [video]
@stephentotilo Stephen Totilo on x
Four studios being divested (Compulsion, Undead Labs, DoubleFine, Ninja Theory) account for around 350 of the job cuts, I'm told. Arkane could add 100+ more While the fate of those studios will draw a lot of attention, the lion's share of the 3,200 cuts are outside those teams
@stephentotilo Stephen Totilo on x
Microsoft's big E3 '18 studio reveals is a shot of a bygone era - Then-new studio Initiative shut in 2025 - Undead Labs / Ninja Theory now spinning off to new owner(s) - Compulsion returned to management DoubleFine, acquired in 2019, also back to management Playground remains [im…
@stephentotilo Stephen Totilo on x
Microsoft's new gaming cuts, some 3,200 jobs impacted through June 2027, follow cuts of over 2,500 in 2024 and scores in 2025 A brutal sequence of events The latest round, under Xbox's new CEO, spins out smaller studios and slashes Xbox platform team https://www.gamefile.news/...
@wario64 @wario64 on x
Xbox - “None of our first party publicly announced games or projects are being cancelled as part of these reductions.”
Sam Carlisle Sam Carlisle on linkedin
So here it is. — My heart goes out to all my friends at XBox games studios. — I've no doubt you will forge a sustainable future, creating games that bring joy and creativity. …
@zeboydgames @zeboydgames on bluesky
Xbox outright firing about 1600 employees now, not counting the 4 studios that they're selling (DoubleFine, Compulsion Games, Ninja Theory, and Undead Labs). Arkane also in danger. Also, planning on similarly large firings in the next 12 months. Absolute bloodbath. — www.the…
r/wow r on reddit
Microsoft is restructuring its gaming business and has laid off around 4,800 employees today. Asha Sharma confirms Blizzard is one of the affected organizations.
r/gaming r on reddit
Double Fine & Compulsion Studios going Independent, and Microsoft is selling Ninja Theory & Undead Labs | …
r/Games r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
r/NoSodiumStarfield r on reddit
I think today's layoffs and restructuring might mean the end of Starfield development and a long hiatus for the franchise
r/XboxGamePass r on reddit
Resetting XBOX - XBOX Wire
r/LastStandMedia r on reddit
BREAKING: Microsoft Is Selling Off Compulsion, Undead Labs, Ninja Theory, and Double Fine; Per Bloomberg Microsoft also Wants Out of Arkane Lyon …
r/Steam r on reddit
Xbox to Cut 3,200 Jobs, Divest Five Studios
r/gamernews r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
r/dishonored r on reddit
[Bloomberg] Jason Schreier: Xbox will begin a consultation process with Arkane Studios, to “review potential strategic options” in the coming months in hopes of selling or spinning out the studio. …
r/GearsOfWar r on reddit
Xbox - “None of our first party publicly announced games or projects are being cancelled as part of these reductions.” (Gears Eday is safe)
r/PS5 r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts; Double Fine and Compulsion Games are going independent, and Microsoft is also selling Ninja Theory and Undead Labs.
r/StateofDecay2 r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts
r/StateOfDecay r on reddit
Some good news, SOD3 is not being cancelled but under new ownership
r/consoles r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts
r/TwoBestFriendsPlay r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts. Double Fine and Compulsion Games are going independent, and Microsoft is also selling Ninja Theory and Undead Labs.
r/ImmersiveSim r on reddit
XBOX Looking to “sell or spin out” Arkane Studios
r/kindafunny r on reddit
Xbox to eliminate 3200 jobs, Compulsion and Double Fine going independent again, Ninja Theory and Undead Labs sold to undisclosed buyers, still in the process of determining Arkane's future
r/StateofDecay3 r on reddit
Undead labs being sold
r/videogames r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts
r/pcgaming r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
r/xbox r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts / Double Fine and Compulsion Games are going independent, and Microsoft is also selling Ninja Theory and Undead Labs.
r/Games r on reddit
Microsoft is selling off four Xbox studios as part of significant gaming cuts / Double Fine and Compulsion Games are going independent, and Microsoft is also selling Ninja Theory and Undead Labs.
@johnwilson @johnwilson on x
They'll strip Xbox to the bone then sell it.
r/videogames r on reddit
Microsoft is laying off 4,800 employees
r/news r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
r/pcgaming r on reddit
Microsoft is laying off 4,800 employees
@doublefine @doublefine on x
[image]
@g27status @g27status on x
Honestly? Made the best of a terrible situation. I won't undersell 3,200 layoffs. That's awful. However, no studios being shuttered, independent teams are given some funding, and Senua/State Of Decay 3 being finished are big “Ws” in today's cold industry.
@mikedrucker Mike Drucker on x
1.) buy company 2.) fire all the experienced talent who'd worked on the same AAA series for decades 3.) hire less experienced talent and give them less pay, impossible deadlines, and contradictory demands on said legacy game 4.) game bombs 5.) sell company as if clever move
@dansgaming @dansgaming on x
I do respect the transparency in this message but it's going to hurt. Lots of XBOX employees will be laid off today or soon. Thankfully no studio is getting shut down entirely and no announced games are getting canceled. It sounds like the financial reality of XBOX was
@daviddoel David Doel on x
Turns out making the next Gears of War a console exclusive and changing Xbox to ‘XBOX’ is not going to save this disaster of a brand. Feeling for all the people impacted here who had a dream of a stable job in this industry.
@dringo Christopher Dring on bluesky
Big cuts, but Xbox has managed to avoid closing any studios today. Double Fine and Compulsion go indie. Ninja Theory and Undead Labs will have new owners. Arkane Lyon process starts today. CEO Asha Sharma wants Xbox to reach 1bn players a day (it currently hits 1bn a year). …
r/diablo4 r on reddit
Microsoft is restructuring and has laid off 3,200 employees today. Asha Sharma confirms Blizzard is affected.
r/StateOfDecay r on reddit
Undead Labs to be funded for State of Decay 3 and Has a Buyer Lined Up.
r/TwoBestFriendsPlay r on reddit
Resetting XBOX (This message was just sent to Team XBOX employees globally.)
r/Asmongold r on reddit
ASHA on X: “This is an important email I sent today to all employees at XBOX: Team, We are beginning the most significant restructure in XBOX history. …
r/gamingnews r on reddit
XBOX: Ninja Theory and Undead Labs Sold, Compulsion and Double Fine Go Indie
r/gamingnews r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
Pure Xbox Fraser Gilbert on x
Xbox Announces 3,200 Job Cuts And Four Studio Departures
@eric_seufert Eric Seufert on x
I would imagine that XBOX moves further in the direction of digital services and, especially, ads. Microsoft has been exploring this direction for years; this significant layoff likely allows them to accelerate those efforts.
@paultassi Paul Tassi on x
I think the main problem with Xbox going forward is going to be what's not addressed in today's announcement, that it has to turn around its core console business and there is still no coherent path to do so. That is arguably its most important strategy component now (expanding
@carygolomb Cary Golomb on x
This is what I thought was the case. The 4 studios that are splitting from Xbox *do not* count as layoffs. The 3200 Xbox layoffs are separate and, as I understand, will mostly affect middle management. To put in context how large that is, that's 2 full Bungie or 6.5x Bethesda
@dotodoya @dotodoya on x
No studios closing +no games cancelled is good news. I like that they are cutting management layers and FINALLY focusing on big good games instead of a wave of artsy mid.
@welfare_jbp John Welfare on x
Also another thing, expect Xbox to no longer be built around Game Pass. Asha directly speaks to how Xbox grew to sustain it and GP did not meet growth expectations. Xbox resetting isn't going to keep Game Pass as the central business model if it isn't acting like one.
r/Overwatch r on reddit
Xbox is cutting 3200 jobs
r/kindafunny r on reddit
Resetting XBOX - XBOX Wire
r/FluentInFinance r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
@eric_seufert Eric Seufert on x
I think this excerpt from the XBOX layoff memo sent out this morning provides an important clue about the future of the company I would imagine that XBOX moves further in the direction of digital services and, especially, ads. Microsoft has been exploring this strategy [image]
Liam McDonald Liam McDonald on linkedin
It's another really tough day for our industry as we see friends and colleagues losing their jobs. I was impacted in the same way last year when ZOS's unannounced project was hit. …
r/Minecraft r on reddit
Mojang hit by Microsoft layoffs as studio shifts to report directly to XBOX CEO Asha Sharma
r/DOUBLEFINE r on reddit
Double Fine to go independent with full control of their IP's
r/france r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
r/technology r on reddit
Microsoft is laying off 4,800 employees
r/Seattle r on reddit
Microsoft is laying off 4,800 employees
r/gaming r on reddit
WSJ- Gamepass has about 30m subscribers. Xbox forecasted they would have 77m by now during the Activision trial
r/LastStandMedia r on reddit
Per WSJ: Game Pass has ~30M Subscribers Currently While Microsoft Internally Projected 77M By This Year; Last Reported Number Was 34 Million in 2024.
@stealth40k @stealth40k on x
Phil Spencer did some good at Xbox like re-establishing relationships with Japanese studios, but his overall legacy is going to be complicated. The Xbox restructuring announcement is directly related to decisions made under his leadership.
@jasonschreier Jason Schreier on bluesky
FWIW I think it's a little strange that “Arkane's Blade is late and over budget” is becoming a lingering news story when the total number of big video games that were *not* late and over budget could be counted on one hand
@jasonschreier Jason Schreier on bluesky
I want to re-emphasize one part of this Xbox story: Half of the 3,200 cuts are happening today and half are happening in the next 12 months. In other words, even people who survived today's layoffs will have to spend the coming year wondering if they're going to be next.
@seanhollister Sean Hollister on bluesky
It's crushing to see what's happening to Xbox. But not as crushing as it would have been if Microsoft had closed these studios and mothballed their games. — It's selling them instead: www.theverge.com/news/961546/ ...
@bethesdaunion @bethesdaunion on bluesky
In what is becoming a stressful annual routine, Microsoft has decided to lay off thousands, including MANY of us at Bethesda Games Studios. — With over 10k developers already cut from previous rounds, those at the top have deemed that insufficient in fixing their mistakes.
@bethesdaunion @bethesdaunion on bluesky
Today we say goodbye to many of our friends and colleagues and to hundreds more across Xbox, including folks that have worked at Bethesda Games Studios for decades. — When will this cycle of cuts in pursuit of ever-greater profits end?
@bethesdaunion @bethesdaunion on bluesky
Because of our One BGS union, we have the right to negotiate over the impacts of these layoffs, helping secure stronger severance packages and better support for those leaving the company. — We will do everything we can to make sure our friends are properly taken care of.
@sphynxian Robert Brookes on bluesky
“1 billion gamers every day” is private equity talk. It's key jingling for the dragons that want to die on larger heaps of gold. — And when there aren't a billion players a day it won't be the promise-makers that pay, but the remainder of the industry. [embedded post]
@spacetwinks Colin Spacetwinks on bluesky
asha sharma going “we want 1 billion players a day” a nice reminder that these execs are fundamentally incapable of understanding that their customers do not have infinite money or even just that time is finite. they just think you haven't been fed the right marketing yet to get…
r/pcmasterrace r on reddit
Microsoft lost 64 cents for every dollar they invested in games
r/starcraft2 r on reddit
Microsoft is restructuring its gaming business and has laid off around 4,800 employees today. Asha Sharma confirms Blizzard is one of the affected organizations.
r/Overwatch r on reddit
Microsoft is restructuring its gaming business and has laid off around 3200 employees. Asha Sharma confirms Blizzard is one of the affected organizations.
r/heroesofthestorm r on reddit
Blizzard is among the recent 4800 employee layoff at Microsoft to “focus on higher priority projects”, let's hope our Janitor is okay.
r/digitalfoundry r on reddit
‘Resetting Xbox’ Layoffs across Microsoft Studios (1600 today, 3200 throughout FY 27)
@caro_milanesi Carolina Milanesi on x
Microsoft cut 4,800 jobs and said AI isn't replacing them. That misses the point. AI already changed how the work gets done, how fast, and how many people a company thinks it needs. Their own Work Trend Index said the opportunity was redesign. The org chart moved toward
@carnage4life Dare Obasanjo on bluesky
“I also want to be direct that the roles eliminated today are not being replaced by AI...At the same time, what is true is that AI is changing how work gets done.” - Amy Coleman, Microsoft's Chief People Officer — Striking the balance of doing layoffs because of AI but not rep…
r/csMajors r on reddit
Microsoft is laying off 4,800 employees
r/technology r on reddit
Microsoft lays off nearly 5,000 employees across Xbox, commercial sales | TechCrunch
r/business r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
r/economy r on reddit
Microsoft is laying off 4,800 employees
@edzitron.com Ed Zitron on bluesky
Ugly thing to say. Microsoft sucks so bad, everybody I speak to there is miserable, bringing up that “ai is changing how work gets done” has absolutely no value here other than key jingling to brainless investors. I hope Satya gets booted at the end of the bubble for the sake o…

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