It’s one of the darkest days in Xbox history.
Xbox CEO Asha Sharma has announced a massive restructuring that will eliminate approximately 3,200 positions throughout fiscal year 2027, with 1,600 employees affected immediately. In an internal email, she described it as « the most significant restructure in Xbox history. »
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But that’s not all.
As part of the overhaul, four Xbox studios are leaving the company:
• Double Fine Productions will become independent again.
• Compulsion Games will also regain its independence.
• Ninja Theory and Undead Labs will transition to new ownership while continuing work on projects such as Senua and State of Decay 3.
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In her message to employees, Sharma explained that Xbox’s current business model is « not healthy. »
She pointed to declining profitability, rising development costs and an organization that had become too complex, with too many management layers slowing decision-making.
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Despite the cuts…
Xbox insists this isn’t a retreat from gaming.
Microsoft says it will continue investing in its biggest franchises—including Call of Duty, Halo, Forza, Minecraft, Diablo and The Elder Scrolls—while simplifying its operations and focusing on long-term growth.
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One important detail…
Unlike previous restructures, the affected studios are not being shut down.
Several will continue operating independently or under new ownership, allowing ongoing projects to move forward rather than being cancelled outright.
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For many players…
This marks the end of an era.
After years of major acquisitions worth tens of billions of dollars, Xbox is now shifting from expansion to consolidation, betting on fewer studios, fewer management layers and stronger blockbuster franchises.
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Xbox isn’t leaving the gaming industry… but it’s entering one of the biggest transformations in its history, and the impact will be felt for years to come.
