Microsoft cuts 4,800 jobs as part of Xbox restructuring
The cuts amount to roughly 2.1% of the tech giant's workforce, with Xbox expected to shoulder a significant share of the layoffs
Microsoft has announced it has cut 4,800 jobs, amounting to roughly 2.1% of its workforce, with Xbox expected to shoulder a significant share of the layoffs.
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In a memo to staff, executive vice president Amy Coleman said the tech giant needed to focus on areas that could better deliver for customers in a “fast-changing industry”.
More than 1,600 roles are to be cut immediately at Xbox, with a further 1,600 jobs affected as four game development studios - Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs - are spun off.
In a note to staff shared on X, Xbox chief executive Asha Sharma described the move as “the most significant restructure in Xbox history”.
She insisted the cuts were “about a bigger future for Xbox, not a smaller one”, adding: “History is full of companies that mistake longevity for inevitability. We will not be one of them.”
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This is an important email I sent today to all employees at XBOX:
— ASHA (@asha_shar) July 6, 2026
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…
Coleman said the wider cuts reflected changing customer demands, telling employees: “Companies don't get to choose whether their industry changes; they only get to choose whether they change with it.”
She added that while the roles would not be directly replaced by AI, the technology was changing how work is done across the business.
The announcement comes at a somber time for the gaming industry, which has already been hit by waves of job losses in recent years.
In 2024, Xbox cut more than 2,000 staff and closed four studios, before Microsoft later announced plans to cut up to 9,000 jobs as it pressed ahead with a multi-billion-dollar investment in artificial intelligence.
The increasing cost of hardware has also prompted tech firms to hike the price of years-old consoles and similar consumer gadgets, with many blaming AI data centres for pushing demand perilously ahead of supply.