Xbox to lay off more employees next month as Asha Sharma works to rebuild system after big losses

Since Asha Sharma took the reins as Xbox CEO in February this year, she has made sweeping changes across the board. Xbox now has a new logo, and the division is once again trying to cater to their core fans. However, these changes are yet to show their impact when it comes to finances, and now Sharma has planned for a 100-day Xbox reset, which, as per reports, may begin with a major round of layoffs.

As per a report from Bloomberg, Xbox is set for a second round of layoffs within 12 months. The Microsoft gaming division saw major job cuts as part of a wider layoff in July last year that impacted 9,000 workers across Microsoft.

The new layoff round is expected to happen shortly after the close of Microsoft’s fiscal year on June 30. Though it is unclear how many employees may be impacted.

Reports hint that the reductions could involve changes to the Xbox studio line-up and possibly a studio closure, while a recent episode of the podcast Giant Bomb mentioned rumours of 1,000 layoffs across the division. Alongside layoffs, the report also indicates significant budget cuts to select departments, including marketing.

Xbox is not the only company facing layoffs in the gaming industry. GTA publisher Take-Two Interactive as well as EA have reportedly cut a number of jobs in recent months.

This cannot continue, Asha Sharma says on Xbox profit decline

The planned cuts come as Xbox faces pressure from falling profitability, weaker console sales and questions over its long-term strategy. In a memo, now available on the Xbox website, Sharma said Xbox’s accountability margin – a Microsoft term for profit margin – had fallen to 3 per cent compared to last year.

She wrote, “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time.”

Sharma and Xbox’s chief content officer Matt Booty told staff that an “Xbox reset” would take place over the next 100 days, adding, “Going forward, this cannot continue.”

Reports said Xbox had been preparing internally for the layoffs for weeks, with Sharma having hinted last month that the business would have to make “hard choices.”

But declining revenue is not the only problem for Xbox. The division is also dealing with a hardware component crisis. According to Asha Sharma, component costs for the 2027 holiday season could be “over five times the prices we paid only two years earlier.” And the situation is similar for memory chips too.

In the same memo, Asha Sharma claimed that it was time for a change in the Xbox business model. She wrote, “We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.” Project Helix refers to the next-generation Xbox console that is under wraps for now.