Tech giant Microsoft Corp. officially announced a large-scale efficiency policy targeting its gaming business unit, Xbox. The move involves cutting approximately 3,200 employees, representing 20% of the division's total workforce, which will be implemented in phases over the next year.
In addition to reducing personnel, Microsoft is also taking strategic steps to close four game development studios. The company has even initiated formal processes to divest another studio, as an integral part of a comprehensive organizational overhaul aimed at improving financial performance currently under pressure.
Xbox CEO Asha Sharma issued a firm statement in an internal memo on Monday (7/6/2026), acknowledging that the business health of the gaming division is currently in a worrying position. Sharma highlighted Xbox's profit margin disparity, which is three to ten times lower compared to industry competitors.
As an initial step of this restructuring plan, 1,600 positions were eliminated on Monday. The remaining 1,600 positions are scheduled to be completed periodically over the next 12 months. This tough decision was made as a corrective step for the company to restore the operational stability of its gaming division amid increasingly competitive market challenges.
