Microsoft plans fresh job cuts at its Xbox division in November and January, according to a report. CEO Asha Sharma is leading this restructuring to simplify operations. Judson Althoff said, “Asha is one of the best leaders we have at the whole company.” Many employees face uncertainty as changes continue.
Microsoft’s Xbox division could face another round of job cuts in the coming months, adding to an ongoing restructuring that has reduced headcount, changed studio ownership plans and raised questions about the future of its gaming business.
According to Fortune, Xbox CEO Asha Sharma is planning further layoffs in November and January, following reductions earlier this year. The report does not specify how many employees could be affected in the upcoming rounds.
The latest developments come as Microsoft attempts to reshape its gaming operations after years of investment and acquisitions. While the company has not confirmed the reported future cuts, its existing plans point to a continued effort to reduce costs and simplify management across Xbox.
Xbox restructuring extends beyond job cuts
Sharma announced a broader organisational overhaul in July, with Microsoft planning to eliminate around 3,200 positions across its gaming business during the 2027 financial year. Approximately 1,600 roles were cut at the time, with further reductions expected over the following months.
Microsoft subsequently announced additional job losses in September, affecting around 260 employees. Separate reporting has also pointed to cuts affecting hundreds of workers across Xbox and other parts of the company, including its Cloud + AI division.
Alongside the layoffs, Microsoft has been reducing expenditure on external vendors and trimming management layers within Xbox. The changes are intended to create a more streamlined operating structure, although their longer-term impact on game development and studio operations remains unclear.
The company has also been reconsidering how some of its studios operate. Double Fine Productions and Compulsion Games have been allowed to return to independent ownership, according to Fortune’s report. Meanwhile, the future of Ninja Theory, the studio behind Senua’s Saga: Hellblade, has come under scrutiny, with the report raising the possibility of closure.
Undead Labs has also been mentioned in connection with ownership changes. However, the precise arrangements for the studios and the extent of any further restructuring remain uncertain.
Xbox sale speculation persists as new hardware plans emerge
The restructuring has fuelled speculation about whether Microsoft could eventually sell or separate its gaming division from the wider business. Judson Althoff, chief executive of Microsoft’s commercial business, pushed back against that interpretation in comments to Fortune, arguing that Sharma’s appointment was inconsistent with a plan to sell Xbox.
“Asha is one of the best leaders we have at the whole company,” Althoff told Fortune. “We would not have put her on a business we intend to sell. There’s going to be a ton of speculation about all this. Time will tell.”
Sharma has also rejected the possibility of a sale. In a recent interview with The New York Times, she stated that “Xbox is not for sale”.
Despite the uncertainty surrounding its organisational structure, Microsoft is reportedly continuing to develop its hardware roadmap. Fortune reported that the company is targeting 2027 for a next-generation handheld device, followed by its Project Helix console in 2028.
The reported launches suggest that Microsoft is continuing to invest in future gaming hardware while reworking the business behind it. However, the company has not publicly confirmed the specific launch timelines cited in the report.
For now, the immediate focus remains on the workforce changes and studio decisions. Further cuts in the coming months would extend a period of significant upheaval for Xbox employees, even as Microsoft seeks to establish a new direction for its gaming division.