Xbox announces 'the most significant restructure' in its history — and it'll cause 1,600 'painful' job losses today and numerous studio sales

• Xbox has announced that it is undergoing a "significant restructure"
• This will include the loss of 3,200 jobs over the fiscal year
• This includes 1,600 job losses today

Microsoft has announced that Xbox is to undergo the "most significant restructure" in the brand's history, with 1,600 jobs being cut today, for a total 3,200 jobs going over the coming months including four studios being jettisoned.

In another crushing blow for the people who make the games we love, these layoffs were strongly rumored to be coming this week — the sheer scale was unknown but predicted to be big. It turns out that was true.

In an email sent to Xbox employees that has now been made public via Xbox Wire, Xbox CEO Asha Sharma began by saying, "After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave Xbox to new management."

Sharma added: "Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected."

As well as the total of 3,200 jobs going this fiscal year, four studios are also affected. Compulsion Games and Double Fine Productions are returning to being independent studios, while Ninja Theory and Undead Labs will gain new ownership with funding to complete their upcoming games, Senua and State of Decay 3.

Arkane — a studio many feared for in the run-up to this restructuring — is "beginning required consultation with its Works Council to review potential strategic options."

In a series of moves over the past decade or so, which has seen Microsoft acquire multiple studios, spend billions and billions of dollars, and make some curious decisions about Game Pass, prices, and more — all to take the brand from third in the console space to, well, third — this kind of feels like the bubble bursting before our very eyes. And the people who will pay the price will be the developers who make the games we all love playing.