Microsoft needs to "reset Xbox," says Asha Sharma, as the company lays off 3,200 employees

Microsoft's Xbox division is undergoing significant restructuring, with approximately 3,200 employees being laid off throughout the 2027 fiscal year, including 1,600 immediately. CEO Asha Sharma stated the business is not healthy and operating at lower margins than comparable companies. Several studios, including Compulsion Games and Double Fine Productions, will transition to independent management, while Ninja Theory and Undead Labs are set to be acquired by new owners.

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Xbox Restructures, Studios Face Closure Amid Funding Shifts

Xbox is undergoing a significant restructuring, leading to funding cuts for external projects like IO Interactive's 'Project Fantasy'. Several internal studios, including Ninja Theory and Compulsion Games, are reportedly at risk of closure. This strategic shift aims to refocus investments on major franchises and secure exclusive content pipelines.

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