Microsoft Cuts 4,800 Jobs, Xbox Division Hit With 1,600 Layoffs
The layoffs and studio divestitures mark a major restructuring of Xbox's first-party lineup, with two acclaimed studios returning to indie status and two others being sold off.
Reporting from 2 sources: Automaton, Game Spark.
Microsoft has laid off 4,800 employees, with 1,600 from the Xbox division. Double Fine and Compulsion Games are becoming independent studios again. Ninja Theory and Undead Labs are reportedly being sold. Xbox CEO Asha Sharma called it a 'reset' and said 20% of the division's workforce will be cut by July 2027.
Microsoft is laying off 4,800 employees today, with the Xbox division accounting for roughly 1,600 of those cuts, according to a report from The Verge. The restructuring extends beyond headcount reductions. Double Fine Productions, the studio behind Psychonauts, and Compulsion Games, known for We Happy Few and South of Midnight, are becoming independent again, returning to indie studio status. Ninja Theory, developer of Hellblade and DmC: Devil May Cry, and Undead Labs, creator of the State of Decay series, are reportedly in the process of being sold. Despite the upheaval, an agreement is in place to continue releasing previously announced titles, including Senua, announced this June, and State of Decay 3.
Xbox division CEO Asha Sharma described the moment as a 'reset' for Xbox in an internal memo. The cuts are not limited to today; the division expects to reduce 20% of its workforce by the end of the fiscal year in July 2027. Sharma acknowledged the difficulty of the change and said it does not reflect the talent or dedication of those affected. The information is based solely on The Verge's reporting; Microsoft has not yet issued an official statement.
Synthesized by Yomimono from the 2 cited sources below, including Japanese-language reporting where cited, then editorially reviewed before publishing.