In a move sure to speed up the development of games and improve sales, Microsoft will reportedly lay off Xbox employees in July. It will also apparently cut budgets in multiple areas of the Xbox division including marketing. This is according to an anonymously sourced Bloomberg report.
Bloomberg’s story is sourced from “people familiar with the company’s strategy,” along with a bleak email to Xbox employees from Asha Sharma, the new Xbox CEO who started in February. Bloomberg says it reviewed the email, but didn’t publish the full text. Microsoft rather cultishly uses its own term, “accountability margin,” instead of “profit margin,” and in the email, Sharma says the Xbox accountability margin has shrunk to 3%. She says the company has spent $20 billion in the past five years “on ongoing investments in our content, platform and hardware subsidy,” only to see revenue decline by “nearly half a billion during that same time.” That’s excluding business from the relatively recently acquired Activision Blizzard King, she says. Layoffs in July of this year will come in the wake of more layoffs at Xbox one year earlier. Xbox was the main division mentioned in news about 9,000 layoffs across Microsoft in July of 2025. “To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” Phil Spencer, Sharma’s predecessor, wrote in a memo last year.
