Key facts
- Microsoft's Xbox division plans significant layoffs and budget cuts.
- The job cuts are expected next month, shortly after the fiscal year ends June 30.
- New CEO Asha Sharma is leading the restructuring.
- Xbox's accountability margin has fallen to 3% amid declining revenue.
- The company invested over $20 billion in content, platforms, and hardware subsidies in five years.
- Recent strategic changes include Game Pass price reductions and ending day-one 'Call of Duty' releases.
Microsoft Corp.'s Xbox division is preparing for substantial layoffs and significant reductions in marketing and other budgets, according to a report by Bloomberg News. These measures mark the first major restructuring under Asha Sharma, who assumed leadership of the gaming unit in February.
The planned job cuts are anticipated to occur next month, shortly after Microsoft's fiscal year concludes on June 30. The exact scale of the layoffs has not yet been disclosed.
Xbox has encountered increasing difficulties in recent years. The company's strategic focus on subscriptions and cloud gaming has not compensated for a decline in console sales and a scarcity of major new game releases. Sharma indicated in an internal email that Xbox's accountability margin had fallen to 3%. She also noted that the company had invested over $20 billion in content, platforms, and hardware subsidies during the past five years, even as annual revenue decreased by nearly half a billion dollars over the same period.
Sharma stated that Xbox would need to rebuild its platform infrastructure and re-evaluate its product portfolio in the coming weeks and months. In April, as part of early strategic shifts under Sharma, Microsoft reduced prices for its Game Pass service and discontinued day-one releases of future 'Call of Duty' titles on the platform.