Xbox job cuts and gaming industry reset

The restructuring also marks a sharp reversal from Xbox’s studio acquisition spree over the past several years. Compulsion Games and Double Fine Productions will return to their management teams and operate as independent studios, while retaining their IP, catalogues and funding runway for their next projects. Ninja Theory and Undead Labs, meanwhile, have entered terms to move under new ownership, with funding in place to continue work on Senua and State of Decay 3 respectively. Arkane Lyon is also beginning the required consultation process in France to review its future options.

The cuts will not be limited to these studios too. Asha said reductions will also take place across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios, although she added that no publicly announced first-party games or projects are being cancelled as part of the reset.

Asha has said Xbox’s current business “is not healthy”, noting that the division is operating at margins far below comparable platform and publishing businesses. Without pinning the blame on her predecessors, she also said Xbox had grown too complex, with some decisions passing through as many as 14 layers of management. As part of the reset, Xbox will reduce management layers, cut vendor spending and promote Helen Chiang, previously head of Mojang, to a new chief operating officer role overseeing content, hardware, platform and services.

For Microsoft, this is less about walking away from gaming than admitting that Xbox’s old expansion strategy has not delivered quickly enough. The company says it will still invest heavily in Xbox, but with sharper focus and a renewed target of returning the business to growth in 2027.