Xbox is cutting up to 1,000 jobs and may close studios in a major reset under new CEO Asha Sharma
Microsoft is preparing a sweeping overhaul of Xbox, with up to 1,000 job cuts expected around June 30 as the company closes out its fiscal year. New CEO Asha Sharma and Chief Content Officer Matt Booty confirmed the reset in an internal memo, acknowledging that more than $20 billion in investment has coincided with a $500 million annual revenue decline. The cuts would span multiple departments, with several game studios potentially facing closure.
The numbers behind the reset
The memo, published on Xbox Wire, is unusually candid. Sharma and Booty wrote that the situation "cannot continue," signaling that the division needs to become profitable rather than just grow. Marketing budgets face significant cuts alongside studio funding. Bloomberg was first to report the layoff timeline, citing the end of Microsoft's fiscal year on June 30 as the trigger date. The exact number of affected roles has not been confirmed officially — the ~1,000 figure comes from anonymous sources.
The move puts Xbox in a different position from its main rivals. Sony and Nintendo have not announced comparable restructuring in mid-2026, making this one of the more visible signs of pressure in the gaming industry right now.
Project Helix under the chip crunch
The reset doesn't stop at headcount. Xbox's next-gen console, Project Helix — a hybrid Xbox-PC design that competes more directly with the Steam Deck than with PlayStation — is being redesigned under pressure from rising component costs. DRAM prices are up roughly 58–63% and NAND flash up 70–75% in Q2 2026, per analyst projections cited by TechLoy. Chief Strategy Officer Matthew Ball confirmed at Summer Game Fest 2026 that demand already exceeds supply and that the team is actively rethinking the hardware to avoid pricing consumers out.
No retail price or launch window has been announced. Sharma has signaled developer access as early as 2027, but a consumer release date remains unconfirmed.
What comes next
The internal memo also leaves the door open for mergers and acquisitions, framing hardware, PC, mobile, and streaming as the four battlegrounds Xbox intends to fight on. Whether the restructuring eases lingering FTC scrutiny over the Activision-Blizzard consolidation remains to be seen — but the shift away from a volume-led console strategy is now clearly stated policy, not speculation.
