Xbox CEO Asha Sharma has disclosed further details regarding the company’s restructuring plan, which was announced yesterday and will result in the elimination of 3,200 positions. The move also includes plans to divest five of its internal game development studios.
The announcement follows a broader trend of workforce reductions across the technology and gaming sectors. Speaking about the decision, Sharma stated that the company had “simply spread ourselves too thin,” a remark that signals a strategic shift toward consolidation rather than expansion.
Scope of the job cuts
The layoffs affect approximately 3,200 employees, a significant figure representing a substantial portion of the company’s workforce. According to Sharma, the cuts are part of a necessary realignment to ensure long term sustainability and focus.
Employees in affected roles were informed of the changes through internal communications. Severance packages and transition support are being offered to those leaving the organization, though specific financial terms were not disclosed.
Studio divestments and restructuring
In addition to the workforce reduction, Xbox plans to divest five of its studios. The identities of these studios have not yet been officially confirmed, but sources indicate they include teams acquired in recent years that have not met performance expectations.
The divestment process will involve finding buyers or partners for these studios, rather than closing them outright. This approach allows the teams to continue operating under new ownership, preserving some jobs and ongoing projects.
Sharma emphasized that the restructuring is intended to streamline operations and improve efficiency. The company will focus resources on a smaller number of key projects and franchises that it believes have the highest potential for success.
Industry context and reactions
The layoffs at Xbox are part of a wider wave of job cuts in the gaming industry. Major companies including Sony, Electronic Arts, and Riot Games have also announced significant workforce reductions over the past year. Analysts point to rising development costs, market saturation, and a post-pandemic normalization of player engagement as key factors driving these decisions.
Industry observers have noted that the phrase used by Sharma, “spread ourselves too thin,” reflects a common challenge among large publishers that have expanded rapidly through acquisitions. Integration of diverse studio cultures and overlapping project portfolios have often led to inefficiencies.
Employee advocacy groups have expressed concern over the human impact of these cuts. Several have called for greater transparency from management regarding the criteria used to select which positions and studios are affected.
Future outlook
Xbox has stated that the restructuring process will be completed over the coming months. The company intends to provide updates on the divestiture of the five studios as transactions are finalized.
Moving forward, Xbox will concentrate on a core portfolio of first party titles and services, including its Game Pass subscription offering. Sharma indicated that the company remains committed to delivering new gaming experiences, but with a more disciplined approach to resource allocation.
No additional layoffs or studio closures are expected beyond those already announced. The company said it will focus on supporting remaining employees through the transition period and ensuring business continuity for its existing products and services.
Source: GamesIndustry.biz
