Xbox’s major internal reset is reportedly set to continue, with three further rounds of job cuts planned for October, November and January. The changes arrive after the company announced in July that it would reduce its workforce by 3,200 positions over the following year.
Under Xbox CEO Asha Sharma, 1,868 jobs have already been eliminated. Fortune reported that long-serving employees have been particularly affected, potentially weakening the institutional knowledge built up across Xbox’s teams.
Microsoft rejects talk of an Xbox sale
Jason Althoff, chief executive of Microsoft’s commercial business, played down ongoing speculation that Xbox could be separated from Microsoft and sold.
“Asha is one of the best leaders we have at the whole company,” Althoff said. “We would not have put her on a business we intend to sell. There’s going to be a ton of speculation about all this. Time will tell.”
Sharma has also said that Xbox is not for sale in a statement reported by The New York Times. For Australian players following the wider console market, our arcade news coverage provides a separate look at the industry’s changing hardware landscape.
New Xbox hardware could be expensive
The same reporting indicates that Microsoft plans to release a next-generation handheld in 2027, followed by its next major console, known as Project Helix, in 2028.
A credible leaker writing on NeoGAF recently claimed that the PlayStation 6’s RAM and NAND alone could cost more than $680. That has prompted speculation that Sony’s next console might sell for more than $1,000. Project Helix is expected to be similarly expensive, or possibly more so, with one recent report suggesting a price of up to $1,800.
Studios and major franchises face restructuring
Xbox has separated from several well-known studios during the current round of cuts. The affected companies include Double Fine, Ninja Theory, Arkane Studios, Compulsion Games and Undead Labs. Ninja Theory and Arkane are reportedly at risk of closure, while Double Fine, Compulsion Games and Undead Labs bought back their independence after internal layoffs.
Teams that remain within Microsoft have also been reorganised. Development of Halo is moving under Activision, the publisher behind Call of Duty, leaving Halo Studios appearing to take on a more supportive role. Obsidian Entertainment has been placed under Bethesda leadership and is working on a new Fallout game. Meanwhile, id Software has suffered cuts severe enough that it may not be able to create another project on the scale of Doom: The Dark Ages.
Why Microsoft says Xbox needs a reset
In a July memo to employees, Sharma said that Xbox’s business was not healthy. She stated that its margins were three to ten times lower than comparable platform and publishing businesses, while the company entered the current console generation with a smaller installed base and a higher cost structure.
Microsoft had pursued growth through Game Pass, multiplatform releases and a broader content portfolio. Sharma said those areas had created meaningful value, but had not expanded as quickly as expected. She concluded that Xbox needed to reset, meaning the consequences of the strategy change are likely to continue well beyond the initial layoffs.
The hardware changes also raise questions for anyone comparing new consoles with dedicated home arcade systems. Our arcade machine buying guide covers the practical considerations around space, controls and display setup, while arcade machines offer a different kind of gaming investment from a high-cost modern console.
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