Xbox has confirmed a major round of layoffs, and it will not be the last. The company is cutting around 1,600 jobs now, but executives say another 1,600 roles are expected to disappear before the end of fiscal 2027.

That means roughly one in five employees could be gone by the time the restructuring is complete.

A long road ahead

The latest cuts are part of Microsoft’s wider plan to reduce thousands of jobs across the company. CEO Asha Sharma said the business cannot make every change in one go, which is why the process will continue over the next year.

The announcement also means many employees who kept their jobs today still face uncertainty. Their roles could be reviewed again before the restructuring ends.

Studios begin moving away

The shake-up is changing Xbox’s studio lineup as well. Compulsion Games and Double Fine Productions will leave Xbox and continue as independent studios. Ninja Theory and Undead Labs are reportedly moving under new ownership, allowing current projects to continue.

Meanwhile, Arkane remains in consultation over its future. Despite the changes, Xbox says not announced first-party games have been cancelled.

Xbox admits the business needs to change

Sharma also acknowledged that Xbox has struggled to reach the financial performance the company expected. Leadership believes the restructuring is necessary to improve long-term growth, even though it comes at a high cost for staff.

The company says franchises, services, and future releases remain central to its plans. Whether these changes deliver the turnaround Microsoft wants is something the industry will be watching closely over the next year.

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