Xbox CEO Asha Sharma Announces Most Significant Restructure in Company History

Xbox CEO Asha Sharma sent an internal memo to Team Xbox employees globally today (July 6, 2026), outlining the largest restructuring in the division’s history.

The memo details immediate and phased workforce reductions totaling approximately 3,200 roles throughout FY27, including 1,600 eliminations effective today, alongside transitions for four studios and broader operational resets across content, platform, and leadership structure.

The changes come as Sharma described Xbox’s current business as “not healthy,” citing margins 3-10x lower than comparable platform and publishing businesses, a smaller Gen 9 install base, higher cost structure, slower-than-expected growth in Game Pass and multi-platform efforts, industry hardware challenges, and over-expansion in studios (noting the division lost 64 cents for every dollar invested in a typical year).

Key Job Cuts and Timeline

• Approximately 3,200 total team reductions across FY27.

• ~1,600 role eliminations effective immediately today.

• Remaining reductions phased throughout the fiscal year.

• Reductions impact teams across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios.

• No first-party publicly announced games or projects are being cancelled.

Studios Transitioning to New Management

Four studios will leave Xbox:

• Compulsion Games and Double Fine Productions will transition to independent studios, retaining their IP, catalog, and runway for future games.

• Ninja Theory and Undead Labs have entered terms to join new ownership, with funding secured to complete and grow Senua and State of Decay 3.

• In France, Arkane management has begun required consultation with its Works Council to review potential strategic options.

Sharma stated the moves aim to help independent creators succeed via open development tools and audiences rather than owning every studio.

Platform and Operational Resets

• Management layers will be reduced to no more than 5 (and where possible, 3) to eliminate up to 14-layer complexity in some areas.

• Platform teams (currently 40% larger than at the start of the generation despite declining player base and playtime) will be streamlined.

• Focus on “makers” (individual contributors), player-coaches, and directly responsible individuals (DRIs).

• Vendor spend targeted for 50% reduction; cleaner code base and shared services.

• New Chief Operating Officer role created with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang (longtime Xbox leader, previously leading Mojang/Minecraft) promoted to the role and will report directly to Sharma.

• Mojang and King will now report directly to Sharma, reflecting their scale as platforms with largest monthly active players.

• Dave McCarthy retiring after 17 years.

Strategic Outlook from the Memo

Sharma emphasized the changes are “about a bigger future for XBOX, not a smaller one.” The company will maintain high levels of investment this year but with “greater focus, greater discipline, and greater clarity.”

The stated goal is to entertain more than a billion people daily, return to growth in 2027, and position Xbox as a leader in a larger, more global, and more creative gaming decade ahead.