Microsoft has just announced the most drastic restructuring move in the history of the Xbox business unit. This decision comes in response to business performance deemed uncompetitive, despite the company investing a massive US$78.7 billion in acquiring various game companies over the past decade.
By the end of fiscal year 2027, Microsoft plans to reduce its workforce by 4,800 people, equivalent to 2.1% of its total global employees. A total of 3,200 positions will come from the Xbox division, with an initial phase targeting 1,600 employees. Beyond staff efficiency, the company has also decided to transfer the management of four of its game studios to third parties.
Xbox CEO Asha Sharma, in an internal memo, openly admitted that current business conditions are unhealthy. She highlighted that Xbox's profit margins lag significantly behind, sitting three to ten times lower than competitors in similar platform and game publishing industries. This challenge comes amid Microsoft's major strategy of prioritizing the Game Pass service and a multi-platform model.
According to Sharma, this ambitious strategy has not yet produced growth in line with company expectations. This step marks a crucial turning point for Xbox, a division that since the early 2000s was designed as the primary challenger to PlayStation's dominance in the global console gaming market.
