The scale of the retreat reflects deep-seated concerns from investors regarding the profitability of the company’s heavy AI investments. Compulsion Games and Double Fine Productions are set to regain their independence, while Ninja Theory and Undead Labs are currently negotiating terms for new ownership. This exodus of talent follows a prior round of 9,000 layoffs last year, signaling a sustained period of contraction for the gaming arm.
Microsoft Cuts 4,800 Jobs as Xbox Staff Shrinks by One-Fifth
Facing a 19% slide in market value and stalled gaming subscriptions, Microsoft is eliminating 4,800 positions across its global workforce. The restructuring hits the Xbox division hardest, with plans to shed 20% of its staff by fiscal year 2027 while spinning off four major development studios into independent entities.
Xbox CEO Asha Sharma remains optimistic, telling employees in a recent memo that the division will return to growth by 2027. Despite the reliance on automated systems to manage internal tasks, the company’s chief people officer maintains that the job cuts are not a direct replacement of human labor by AI, even as the firm pivots toward increased automation to preserve margins.
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