Microsoft is slashing approximately 4,800 positions, roughly 2.1% of its global workforce, as the company undertakes a sweeping overhaul of its Xbox gaming division. The cuts, confirmed on July 6, represent the latest in a growing pattern of major tech firms trimming headcount in the name of AI-driven efficiency.
The Xbox division is absorbing a disproportionate share of the pain. Around 1,600 roles are currently affected within the gaming unit, with leadership indicating the division could lose approximately 20% of its staff by the close of the fiscal year. For a company that has spent over $20 billion on gaming acquisitions and content development over the past five years, that’s a remarkably blunt admission that the strategy hasn’t been paying off.
The Xbox problem
Xbox head Asha Sharma cited profit margins that had fallen to just 3%. Increased hardware costs and declining revenue trends have made the division’s current trajectory, in leadership’s own assessment, unsustainable.
The restructuring goes beyond just cutting heads. Microsoft plans to spin off or sell four development studios as part of the reset strategy.
