'Xbox isn't healthy': CEO's blunt message after 3,200 layoffs

'Xbox isn't healthy': CEO's blunt message after 3,200 layoffs

Asha Sharma, the CEO of Xbox, has announced a major restructuring of the company.

In an email to employees, she revealed that around 3,200 jobs will be cut over the next fiscal year. This accounts for nearly 20% of Xbox's total workforce.

The decision comes as part of Microsoft's broader AI-led job cuts strategy.

Layoffs to be immediate and phased

Microsoft is laying off 4,800 employees company-wide effective immediately. This initial wave includes 1,600 cuts from its Xbox division.

However, Xbox faces a total of 3,200 reductions through fiscal year 2027; the remaining 1,600 Xbox employees will be phased out later in the fiscal year.

The restructuring also involves Xbox divesting four gaming studios and preparing to part ways with another one.

'We must reset Xbox'

"Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses," Sharma said.

She added that Xbox started this generation with fewer users and higher costs, betting on Game Pass, multi-platform releases, and more content to drive growth. While these areas grew, they were too slow to offset a weakening core business.

"And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox."