Xbox hit hard as Microsoft cuts 4,800 jobs
Microsoft is cutting 4,800 jobs and reshaping its Xbox business in one of its largest workforce reductions this year, a move that will eliminate thousands of gaming division roles and separate four studios from the company.
The tech giant announced the cuts Monday, July 6, saying about 2% of its workforce will be affected. Xbox is expected to account for roughly 3,200 of the layoffs, with additional job losses planned through fiscal year 2027 as the company restructures its gaming operations under CEO Asha Sharma.
"The way technology is built, deployed, and used is transforming faster than at any point in my time here," Microsoft's chief people officer, Amy Coleman, wrote in a message to employees announcing the layoffs.
Xbox to lose about one-fifth of workforce
In a separate message to Xbox employees, CEO Asha Sharma said the gaming division's restructuring will ultimately eliminate about 3,200 jobs, including 1,600 employees laid off on July 6.
"I recognize that a year-long restructuring creates additional challenges," Sharma wrote. "Unfortunately, it is not possible to make all the necessary changes in a single day."
Sharma, a former Meta and Instacart executive, took over as Xbox CEO in February following the retirement of longtime gaming chief Phil Spencer.
Four studios to be spun out
Beyond the workforce reductions, Microsoft is also parting ways with four game studios. According to Sharma, Compulsion Games and Double Fine Productions will become independent companies. Ninja Theory and Undead Labs, meanwhile, have entered agreements to move under new ownership.
The moves mark one of the most significant shakeups for Xbox in recent years, affecting both staffing and Microsoft's portfolio of game developers.
Layoffs follow employee buyouts
The latest cuts come only months after Microsoft offered voluntary buyouts to roughly 7% of its U.S. workforce in April.
Coleman said more than one-third of eligible employees accepted those offers and indicated the company could consider similar programs again.
"Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations," Coleman wrote.
Fernando Cervantes Jr. is a trending news reporter for USA TODAY. Reach him at fernando.cervantes@usatodayco.com and follow him on X @fern_cerv_.
This article originally appeared on USA TODAY: Xbox hit hard as Microsoft cuts 4,800 jobs
Reporting by Fernando Cervantes Jr., USA TODAY / USA TODAY
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This story was originally published July 6, 2026 at 3:01 PM.