Microsoft's Xbox 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 2026-07-07

Context & Ripple Effects

Xbox’s reset follows prior studio closures, job cuts across teams including King, ZeniMax and Halo Studios, and game cancellations. The unit’s leadership had also warned of a 100-day reset after revenue declined over the preceding five years.

Reports in June indicated that studios including Ninja Theory were exploring buybacks to avoid closure. This plan formalizes divergent outcomes: independence for Compulsion and Double Fine, and sales for Undead Labs and Ninja Theory.

First-order effects

About 1,600 Xbox employees face immediate job losses, within a planned reduction of roughly 3,200 roles over the next year.
Microsoft will no longer directly operate the studios it spins off or sells, while the affected studios must transition to independent ownership or new buyers.

Second-order effects

The studios’ active projects, staffing and publishing arrangements will be subject to new owners’ or independent management’s priorities, adding near-term uncertainty for their teams and Xbox’s internal release pipeline.
Other Xbox studios and external development partners are likely to face tighter scrutiny over costs and portfolio fit as Microsoft reallocates resources after the divestitures.

Third-order effects

If this pattern continues, Xbox could become a more selectively managed games organization: retaining fewer in-house studios while relying more on partnerships, acquisitions’ core assets, and externally produced releases.
The outcome will test whether studio independence and sales preserve creative capacity better than consolidation under a large platform owner, particularly after repeated cuts and cancellations.

The trend: This is part of a broader retrenchment in which large game-platform owners are reassessing the cost and strategic value of expanded internal studio networks.

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 …
@doublefine @doublefine on x
[image]
@compulsiongames @compulsiongames on x
An important update from Compulsion Games. [image]
@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.
@jthefrog0 @jthefrog0 on x
How does one manage to do this, without closing a single studio... I hate layoffs, and it sucks that talented people will lose their jobs, but that is genuinely impressive work in that part
@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.
@mikeynohmore Mikey NohMore on x
I respect how casually ruthless Asha is.
@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 …
@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]
@tekbog @tekbog on x
14 layers of management btw
@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.
@ethanrothamel Ethan Rothamel on x
Unfortunately, after almost 10 years with Microsoft, I was caught in this wave of layoffs alongside so many other bright colleagues. It has been nothing short of a pleasure to work for you all, the wonderful Mixer/Xbox communities I spent so much time with over the last decade💚
@hiddenxperia @hiddenxperia on x
I'll be honest my thoughts on this are wildly sporadic On the one hand I'm glad Xbox are reprioritising their main IPs (and the main IPs of their owned studios like Bethesda), and the efforts to reduce bureaucracy I'm sure will be a Godsend It's just a gigantic fkn shame that
@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
@plumbnick Nick Plumb on x
We all saw this coming... Asha (important enough for just a first name) takes over as Xbox CEO and within a few months, fires thousands of employees, seizes direct control of Mojang and King (two of their top studios), promotes an Asian woman to COO and pushes the white guy
@moshimoshimoan @moshimoshimoan on x
The email she sent: [image]
@mightygazelle1 Mighty on x
I know its been easy to dunk on Xbox the last decade, but is it weird to say I actually think they may finally rebound? Seeing a company admit mistakes, regrets and acknowledge their current position is atleast a good start. Competition is greatly needed right now.
@soulblazerz @soulblazerz on x
No announced games cancelled. No shuttered. IP rights remain with the studios that are separating. This isn't even remotely close to the sheer level of “Xbox is dead” the games media has been feeding us these last two weeks. The layoffs suck, but wow. Was expecting much worse.
@antvenom @antvenom on x
“Mojang will now report directly to me” What? Mojang have generally operated with autonomy, so, I'm curious what she will ultimately mean by saying this. Thoughts?
@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
Nowhere near as bad as insiders were hyping it up to be 14 layers of management is so absurd, you need to cut that down regardless.
@videocardz @videocardz on x
Finally, @PlayStation can tweet again.
@jackmovejohnny John Hartsfield on x
This is what a real boss that has standards looks like. Phil Spencer was a clown trying to play nice guy with everyone.
@nikomueller Niko on x
1️⃣No games are canceled 2️⃣No studio gets closed ▶️That's why you don't report on rumors You're welcome 😉
@tippity @tippity on x
video game industry the last week [image]
@boundarybreak @boundarybreak on x
No game studios were shut down as a result of this announcement and Asha took on a generation of XBOX that was SO BAD that many of us assumed they would stop making consoles all together. Aka, it's extremely unfortunate for the individuals who lost their job but also the most
@theghostofhope Hope on x
Still not over the mention of FOURTEEN layers of management...
@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
@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
@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.
@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
@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…
@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.
@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/...
@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.
@wario64 @wario64 on x
Xbox - “None of our first party publicly announced games or projects are being cancelled as part of these reductions.”
@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
Dan Rayburn Dan Rayburn on linkedin
XBOX's CEO: “𝘀𝗼𝗺𝗲 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻𝘀 𝗻 …
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. …
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. …
@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.
@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.
@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/ ...
@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]
@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.
@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…
@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…
@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…
@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). …
@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…
r/theouterworlds r on reddit
Outer Worlds Studio Obsidian Losing 25% Of Staff In Xbox Cuts
r/Fallout r on reddit
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r/rpg_gamers r on reddit
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r/projecteternity r on reddit
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r/PS5 r on reddit
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r/pcgaming r on reddit
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r/avowed r on reddit
Outer Worlds Studio Obsidian Losing 25% Of Staff In Xbox Cuts
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/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/digitalfoundry r on reddit
‘Resetting Xbox’ Layoffs across Microsoft Studios (1600 today, 3200 throughout FY 27)
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/Minecraft r on reddit
Mojang hit by Microsoft layoffs as studio shifts to report directly to XBOX CEO Asha Sharma
r/italygames r on reddit
Altri licenziamenti in casa Microsoft
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/Overwatch r on reddit
Xbox is cutting 3200 jobs
r/TwoBestFriendsPlay r on reddit
Resetting XBOX (This message was just sent to Team XBOX employees globally.)
r/DOUBLEFINE r on reddit
Double Fine to go independent with full control of their IP's
r/kindafunny r on reddit
Resetting XBOX - XBOX Wire
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/france r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
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/gamingnews r on reddit
XBOX: Ninja Theory and Undead Labs Sold, Compulsion and Double Fine Go Indie
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/videogames r on reddit
Microsoft's Xbox to Cut 3,200 Jobs, Divest Five Studios in Major Overhaul
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/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/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.
@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
@johnwilson @johnwilson on x
They'll strip Xbox to the bone then sell it.
@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…
@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…
@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/LinusTechTips r on reddit
Microsoft is laying off 4,800 employees (mostly Xbox employees)
r/csMajors r on reddit
Microsoft is laying off 4,800 employees
r/technology r on reddit
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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
r/Seattle r on reddit
Microsoft is laying off 4,800 employees
r/FluentInFinance r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
r/gamingnews r on reddit
Microsoft cuts 4,800 jobs, as Xbox unit downsizes and plans to spin off four gaming studios
r/videogames r on reddit
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r/Layoffs r on reddit
Microsoft cuts 4,800 jobs across sales and Xbox. Read the memo.
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
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
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.
r/siliconvalley r on reddit
Microsoft is laying off 4,800 employees
Gameranx Ryan Parreno on x
Xbox's Reset Results In 1,600 Layoffs, But No Announced Games Or Studios Cancelled
Gameranx Ryan Parreno on x
XBOX Is Stripping Away Their 14 Layers Of Bureaucracy And Appointing A COO With Sweeping Powers
r/antiwork r on reddit
Microsoft cuts 4,800 jobs across sales and Xbox. Read the memo.
r/gamingnews r on reddit
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r/ICGA r on reddit
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Pure Xbox Craig Reid on x
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r/ArkaneStudios 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. …

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