Microsoft's Xbox cuts 1,600 employees, with plans to shed 20% of its workforce this year

In a significant move, Xbox's new CEO Asha Sharma has announced plans to reduce the division's workforce by 20% this fiscal year. This decision comes as part of a broader restructuring effort aimed at revitalizing the company's operations. The announcement follows Microsoft's recent confirmation of laying off approximately 4,800 employees, which represents about 2.1% of its global workforce. Within this, Xbox will account for 1,600 job cuts, aligning with the company's strategy to streamline operations and focus on key priorities. Over the course of the fiscal year ending in June, Xbox intends to eliminate a total of 3,200 positions. In a memo shared with employees, Sharma expressed the challenges facing the business, stating, "Our business today is not healthy. We are operating at margins that are significantly lower than those of comparable firms in the industry." This restructuring highlights the need for Xbox to reset its content portfolio, as the gaming landscape has become increasingly competitive with an influx of independent studios. Sharma emphasized that while Xbox has expanded its studio portfolio since 2018, the growth in the number of games being produced has outpaced expectations. The restructuring will involve moving four studios under new management and streamlining the organization to foster better decision-making and accountability. As part of the reset, Xbox will focus on simplifying its platform, cutting down management layers from 14 to a maximum of five, and ensuring a flatter organizational structure. This is intended to enhance efficiency and improve the overall player experience. Additionally, to unify operations, Helen Chiang has been appointed as the Chief Operating Officer, a role that will encompass end-to-end responsibility across various divisions within Xbox. Sharma conveyed optimism for the future, stating, "These changes are about a bigger future for Xbox, not a smaller one," as the company aims to invest in its growth and adaptability in an evolving gaming market.