Microsoft is cutting 3,200 positions within its Xbox gaming division. These layoffs are part of a larger reduction of 4,800 employees across the company. The move follows a decade where Microsoft invested nearly $80 billion in content and studio acquisitions.
Xbox CEO Asha Sharma described the division’s business as not healthy. Profit margins for the gaming unit remain significantly lower than those of its competitors. Game Pass subscriber numbers have stalled at 30 million. This total misses the company’s internal goal of 77 million subscribers by 2026.
Microsoft will divest five game studios as part of this strategic reset. Compulsion Games and Double Fine will return to independent status. Ninja Theory and Undead Labs will be spun off to new ownership. Arkane is currently reviewing its strategic options.