24 sources

Xbox cuts 3,200 jobs and parts ways with four studios in sweeping reset

Xbox cuts 3,200 jobs and parts ways with four studios in sweeping reset
#xbox #playstation
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New Xbox CEO Asha Sharma announced a sweeping overhaul of Microsoft's gaming division on July 6, cutting 20% of the organization — 3,200 jobs — over the next 12 months. Four studios are being divested: Double Fine and Compulsion Games are going independent with Microsoft runway funding and keeping their IP, while Undead Labs and Ninja Theory have been sold to undisclosed buyers. Arkane Studios' fate remains unresolved, with Xbox saying the studio is reviewing its "potential strategic options."

Only 350 of the 3,200 job cuts are tied directly to the four departing studios, meaning the remaining Xbox teams face significant but still unclear reductions. Sharma stated that cuts will "vary in size" across remaining studios and confirmed no in-development games have been canceled. King — the Candy Crush developer — and Mojang will now report directly to Sharma, with her memo flagging both as strategic priorities due to their massive monthly active player bases. Blizzard's situation remains murky, though Sharma's communications suggest cuts are coming there too; BlizzCon on September 12–13 may bring more clarity.

The restructuring caps a brutal stretch for Xbox that began accelerating after Microsoft's $70 billion Activision Blizzard acquisition in 2022. Phil Spencer, who built Xbox's sprawling studio empire across the generation, has already departed alongside Sarah Bond. Under Spencer, Xbox acquired dozens of studios to cover virtually every genre — but that breadth is now being treated as a liability rather than an asset. The studios being cut or sold include some of the most critically acclaimed in the industry: Ninja Theory won awards at The Game Awards, BAFTA, and D.I.C.E. for the Hellblade series, while Arkane was in development on Marvel's Blade, a project that many saw as one of Xbox's clearest paths to a Spider-Man-style blockbuster hit. Game Informer's editorial framing puts this generation's Xbox story in even starker terms — corporate mismanagement, mass layoffs across the broader industry, and anti-consumer decisions have defined the PS5 and Xbox Series X era more than any individual game release.

The community and press reaction has been bleak. Arkane's original founder publicly asked Sharma "how much?" after the studio was put up for review — a pointed signal that the people who built these studios aren't ready to let them disappear quietly. The core question hanging over the reset is whether shedding this much talent and IP actually fixes anything, or whether Xbox is dismantling the very studios it would need to compete. What remains — Halo Studios, Playground Games, The Coalition, and the Activision Blizzard catalog — is a narrower bet, and whether that focused approach can rebuild Xbox's identity after an underwhelming generation is still very much an open question.

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