Microsoft Corporation has announced a major restructuring that will eliminate 4,800 jobs — approximately 2.1% of its global workforce. The main impact has been on the Xbox gaming division, where 1,600 employees have already been laid off, with a second wave of similar scale planned before the end of the fiscal year. In total, the number of eliminated positions in this sector will exceed 3,200.
Xbox Head Acknowledges Business Unprofitability
Asha Sharma, who took over the gaming division in February, replacing Phil Spencer, directly told the team that the sector's economic model is no longer working. "Today, our business is unprofitable," she noted. According to her, Xbox's margin is 3 to 10 times lower than that of other platforms and companies in the gaming industry. The reason cited is the prolonged crisis with console components — their prices are rising, while competition with Sony PlayStation and Nintendo Switch is only intensifying.
Sony, in turn, has announced it will cease production of physical game discs in January 2028. The shift to digital formats reflects an overall industry trend that Xbox is also following.
Studio Fate: Separation and Change of Ownership
The parent company is changing the status of four development studios. Compulsion Games and Double Fine Productions are being set adrift, becoming independent. Ninja Theory and Undead Labs are transitioning to new owners.
| Studio | New Status |
| Compulsion Games | Independent Company |
| Double Fine Productions | Independent Company |
| Ninja Theory | Transition to New Owner |
| Undead Labs | Transition to New Owner |
These steps affect assets from Activision Blizzard, which were acquired three years ago in a record $69 billion deal.
Layoffs Amid Falling Stock Prices
Chief People Officer Amy Coleman explained that rapid technological changes were a key factor in making this decision. In April, Microsoft offered employees a stock buyout program — more than a third of those eligible agreed. This trend is characteristic of the entire market: layoffs in the technology and financial sectors continue monthly in 2026 as interest in artificial intelligence grows.
The crisis in the gaming segment coincides with a roughly 19% decline in Microsoft's stock price over the past six months. Investors are questioning whether significant investments in AI will pay off amid pressure on technology company stocks.
The Xbox restructuring will continue through the end of fiscal year 2027. It remains unclear how much further the division will shrink before changes under Sharma's leadership begin to yield results.
Expert Opinion: The situation surrounding Xbox is a classic example of how even industry giants are not immune to structural crises. The unprofitability of Microsoft's gaming business, against the backdrop of billion-dollar investments in Activision Blizzard, looks like a worrying signal. Investors should closely watch whether Asha Sharma's new strategy can reverse the trend; otherwise, the stock may continue to decline.