Xbox Lays Off 3,200 Staff and Moves Five Studios Out of the Company

Xbox is cutting 3,200 jobs, about 20% of the organization, as part of a wider Microsoft reduction affecting 4,800 employees. 1,600 Xbox roles are being eliminated immediately, based on an internal email from Xbox CEO Asha Sharma.

The company is also moving five internal studios out of Xbox: Compulsion Games, Double Fine, Ninja Theory, Undead Labs, and Arkane. Sharma said in a post on X that the changes are part of a reset meant to narrow Xbox’s spending and focus.

Compulsion Games and Double Fine are being spun out as independent studios under their original ownership. Both will keep their IP, back catalog, and funding runway for future projects. Ninja Theory and Undead Labs have entered terms for new ownership and funding, with development expected to continue on Senua and State of Decay 3.

Arkane’s situation is less settled. The studio has started consultation proceedings in France to review possible options, which is required under French employment law.

Other cuts are planned across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Sharma said no publicly announced first-party games are being cancelled as part of the reset.

Xbox is also changing its internal structure. Mojang and King will now report directly to Sharma, while Helen Chiang, previously tied to Minecraft leadership, has been named Xbox COO. Dave McCarthey, Xbox corporate VP of Product Services, has left the company after eight years in the role.

The layoffs follow earlier voluntary departures tied to Microsoft’s financial year, which began July 1. The story is still developing.