Microsoft to cut about 4,800 jobs, with Xbox facing a major rework and potential studio spin-offs

Microsoft said it will eliminate about 4,800 jobs across the company, roughly 2.1% of its workforce, in a wide cost and organization reset that also reshapes its Xbox gaming business, according to multiple reports of internal employee messages.

The cuts are expected to hit Xbox particularly hard. Reported accounts of a message from Xbox CEO Asha Sharma say Xbox will lose about one-fifth of its staff, with 1,600 roles eliminated as part of the initial restructuring and another 1,600 expected to exit over the following year.

Microsoft executives described the changes as a response to shifting customer needs and faster industry transformation. Amy Coleman, identified in the reports as Microsoft’s executive vice president and a chief people officer figure, told employees that the company needed to focus on areas that can deliver for customers amid a “fast-changing industry,” and she emphasized that work processes are being altered by artificial intelligence.

In addition to staffing reductions, the restructuring plan described by reporters includes a possible break-up of parts of Xbox’s game-development organization. Sharma’s message, as reported, said four studios would be spun off as part of the changes: Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab.

The same reported communications sought to position the move as an expansion of long-term options rather than a shrinkage of ambition. Sharma was quoted describing the restructure as “the most significant restructure in Xbox history” and saying the changes are about “a bigger future for Xbox, not a smaller one.”

The timing and scope of the announcement also underscore pressure on the broader gaming sector, where prior rounds of layoffs and studio shutdowns have been common as publishers try to contain costs. Microsoft’s current restructuring comes after earlier workforce reductions and studio exits tied to its gaming portfolio over the past year, according to the reporting.

Separately, the reports described how Microsoft is approaching its own technology shift. Coleman’s message, as relayed, indicated that Microsoft would not replace the lost roles with artificial intelligence, while stressing that AI is changing how work gets done, which can affect both staffing plans and processes.