Microsoft is expected to cut Xbox jobs now that its fiscal year has closed

Microsoft is expected to begin cutting jobs across its Xbox division now that the company's fiscal year has ended, according to reporting from Bloomberg, which said the layoffs would come shortly after the June 30 close. Microsoft has not announced the cuts or given a number, and the company has not commented publicly on the scope.

The reporting lands at the end of new Microsoft Gaming CEO Asha Sharma's first few months on the job. Sharma was named executive vice president and CEO of Microsoft Gaming on February 20, taking over from Phil Spencer, who is retiring after 38 years at the company. Sharma came from Microsoft's CoreAI group and, before that, was chief operating officer at Instacart and a product executive at Meta.

What Sharma told staff

About 100 days into the role, Sharma sent employees a memo laying out the case for a reset. She wrote that the current spending "cannot continue," describing a business that had fallen to a 3% "accountability margin." Over the past five years, per the memo as reported by GeekWire and Variety, Xbox spent more than $20 billion on content, platform, and hardware subsidies while annual revenue fell by nearly half a billion dollars.

Bloomberg reported the plan also involves cutting marketing budgets and other spending, on top of headcount.

The number nobody has confirmed

An exact figure has not come from Microsoft. Industry chatter has put the cuts at roughly 1,000 roles, but no one has attached that number to a Microsoft source, and it should be read as a rumor until the company says otherwise. What has been reported with more confidence is the timing, after the fiscal year, and the direction, down.

For scale, Microsoft cut about 1,900 gaming jobs in January 2024, after the Activision Blizzard acquisition closed, and made more reductions later that year. A round larger than that would rank among the biggest in the industry's recent history, which is part of why the reporting has drawn the reaction it has.

Studios and partners already in the mix

Some of the fallout is already visible. BCN reported on June 26 that Xbox is closing Compulsion Games, the studio behind South of Midnight. Other Xbox studios, including Double Fine and Ninja Theory, have been reported to be in talks that could end with them going independent rather than shutting down, though nothing has been finalized publicly.

There is also reporting that Xbox has paused negotiations for new third-party Game Pass deals and moved to end some existing partner contracts. Yahoo and other outlets noted the cuts appear to be reaching companies Microsoft does not own, through those partner relationships.

Workers respond

Unionized Xbox employees, represented by the Communications Workers of America, pushed back on the reports before any cuts were confirmed. In a statement covered by Kotaku, the workers said they "will not be treated as disposable." Microsoft recognized a union covering part of its gaming workforce after the Activision Blizzard deal, which gives affected employees a bargaining channel that did not exist in earlier rounds.

Where this sits

This is the latest piece of hard Xbox business news in a short stretch. Microsoft is raising console prices again on August 1, with the Series X now topping out at $800, and it confirmed the Compulsion closure last week. The layoffs, if and when Microsoft details them, would be the largest of the three moves. Until the company puts its own numbers to it, the honest description is that the cuts are expected, the timing points to now, and the exact size is not yet public.