Xbox is having one of the roughest days in its history, and this time, the person delivering the bad news is not dancing around why it happened. New Xbox CEO Asha Sharma has confirmed what she calls the most significant restructure the brand has ever gone through, and the numbers behind it sting. Around 3,200 roles are being eliminated across the gaming business between now and the end of fiscal year 2027, with roughly 1,600 of those going immediately.
Asha Sharma Admits Xbox’s Business Is Not Healthy
In her message to staff, she said plainly that the business today is not healthy, and she made no attempt to spin it.
Xbox has been running at margins that sit far below comparable platforms and publishing rivals, in some cases three to ten times lower. The company went into this console generation with a smaller install base and a heavier cost structure than its competitors, and it has been paying for that ever since.
The Game Pass and Multiplatform Bet Did Not Deliver
Here is where it gets interesting for anyone who has tracked Xbox’s strategy over the last several years. Sharma essentially admitted that the big bets did not return what the company hoped. In an effort to grow, Xbox leaned hard into Game Pass, a multiplatform future where its games showed up everywhere, and a much wider portfolio of content. Those moves created some value, but Sharma was honest that they simply did not grow at the pace leadership expected. And while the company waited for that growth to arrive, the core business kept getting weaker.
The response was to keep pouring more in. More teams, more money, more studios, more time, all in the hope of a better outcome that never quite showed up. Reports put Xbox’s spending at more than 20 billion dollars over five years on content, platform work, and hardware, and that figure does not even include the enormous Activision Blizzard King acquisition.
Losing 64 Cents on Every Dollar
The most quotable line from the whole statement was about studio spending. Sharma revealed that in a typical year, Xbox lost 64 cents for every dollar it invested. As she put it, it is neither possible nor desirable to own every great studio, and Xbox has learned it is not the right home for all of them.
Four Studios Leaving and a Flatter Xbox
As part of the reset, four studios are heading out the door. Compulsion Games and Double Fine are returning to independence with their IP and catalogs intact, while Ninja Theory and Undead Labs are moving to new ownership with funding to finish Senua and State of Decay 3. Arkane in France has entered consultation over its future. On top of that, Sharma wants to strip Xbox’s bloated management structure down from as many as 14 layers to no more than five, and ideally three.
A Reset, Not a Retreat
Sharma is framing all of this as a bigger future rather than a smaller one, insisting Xbox will invest as much this year as ever, just with sharper focus and discipline. She even closed with a warning that history is full of companies that mistake longevity for inevitability, and that Xbox will not be one of them. Whether that confidence lands with the thousands of people losing their jobs is a very different question.
