After burning its previous business plan to the ground—leaving thousands of its former Microsoft and developer studio staff to suffer in the conflagration—Xbox has left itself no choice but to pin its future hopes on next-gen hardware. True to form, Xbox’s new strategy is seemingly “you can’t make an omelet without taking a bulldozer to the chicken coop.” The full-scale Xbox “reset,” as described by CEO Asha Sharma, led the company to ax 1,600 staff positions across several of Microsoft’s teams and among various studios. Xbox has cut four studios loose and left developers like Obsidian, Bethesda, and id Software short on staff. As heartbreaking as it is to read longtime devs’ farewell letters, this is only the start. Xbox plans to cut ties with 3,200 employees by the year’s end.
Obsidian Enterainment was hit by the XBOX reset layoffs. This includes their art director who worked there for 21 years. #Xbox pic.twitter.com/sNRHP5SZir — Rebs Gaming (@Mr_Rebs_) July 6, 2026 The one part of Xbox that may survive relatively unscathed is the console division. According to Windows Central, anonymous sources within Xbox claim that the team behind the upcoming Xbox “Project Helix” console remains intact. According to the report, the console won’t be delayed. That’s despite what Sharma called in her letter to staff “the most severe hardware crisis in [the video game industry’s] history.” Like every other company that has a toe in computing, the ongoing memory pricing crisis has left Microsoft’s gaming division scrambling for ways forward. Xbox recently hiked prices (the third one in a year) for its Series S and Series X consoles by $100 to $150 depending on storage size. However, Windows Central’s sources suggest the console team creating Project Helix is trying to “innovate on materials” to keep costs down. Even still, the next-gen Xbox was originally billed as one of the most powerful consoles available. Xbox has touted that Project Helix should be able to play PC games as well as Xbox titles, and such a device seems like it would demand a premium price. Even a company as big as Microsoft can’t negotiate a favorable deal on memory from the increasingly cartel-like memory makers. For instance, Micron—one of the big three semiconductor companies that makes RAM and SSDs—has emphasized it’s now pursuing five-year contracts that could keep memory prices high until at least 2030. Sharma, who has been in her position for less than five months, has mentioned multiple times that the average gamer would not be able to afford consoles at obscene prices.
