Xbox is selling a comeback story, but the first chapter under Asha Sharma may be job cuts. Microsoft’s Xbox division is planning significant layoffs after Microsoft’s fiscal year closes on June 30, along with major cuts to marketing and other budgets, Bloomberg reported, according to Reuters. The exact number of affected roles has not been confirmed, and Microsoft did not immediately respond to Reuters’ request for comment.
The new angle here is the tension between Xbox’s reach and its reality check. Microsoft said in February that Sharma would become CEO of Microsoft Gaming, reporting directly to Satya Nadella. The company also said Xbox reaches more than 500 million monthly active users and spans nearly 40 studios across Xbox, Bethesda, Activision Blizzard, and King.
On paper, that sounds like empire talk. In practice, the numbers have been rough. In Microsoft’s March quarter, gaming revenue fell 7%, Xbox content and services revenue dropped 5%, and Xbox hardware revenue sank 33% because fewer consoles were sold.
Sharma’s own words make the reset sound less like branding and more like triage. In an employee email seen by Bloomberg, she wrote, “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined by nearly half a billion during that time.” Then came the line employees probably felt in their stomachs: “Going forward, this cannot continue.”
That matters because Microsoft completed its Activision Blizzard acquisition on October 13, 2023, framing the deal as a way to expand access, strengthen cloud gaming, and bring major franchises like Call of Duty to more players. Now, less than three years later, Xbox appears to be cutting around the same ecosystem it paid heavily to expand.
For players, the shakeup could show up as fewer splashy marketing pushes, harder calls on which games get funded, and a sharper divide between Xbox as a platform and Xbox as a publisher. For workers, though, the message is more immediate: the company that says it wants to be “where the world plays” may be trying to get there with a smaller team.
