Bloomberg's Jason Schreier has recently reported that "significant" layoffs are planned for Xbox Gaming after the end of June 2026, citing insider sources familiar with the situation. It's unclear what the exact scale and scope of the layoffs will be, but other indications suggest that the situation at Xbox is somewhat dire. In a recent blog post, Asha Sharma posted an email previously shared internally at Microsoft, detailing some of the company's struggles, specifically surrounding profitability and sustainability. The blog post also reveals that Sharma is planing a company-wide reset that she hopes will "revive Xbox." The Xbox Wire blog post published by Asha Sharma and Matt Booty on June 10 calls out the fact that, aside from Activision Blizzard King, despite spending nearly $20 billion in the last five years, annual revenue has declined by "nearly half a billion" during the same period.

The executives go on to mention the ongoing hardware crisis and how the decisions made by Xbox in the past have resulted in the company being hit harder by component price hikes and shortages than other hardware vendors. The blog post also touched on complexity and the fact that Xbox has over-extended itself as a result of executing on too many changing strategies instead of investing in "more readily available content," while not adequately funding its "industry-defining franchises," for success. Xbox is also doubling down on exclusives, with the post stating that "a reliable pipeline of first- and third-party exclusives and new IP are critical to our success." Going forward, it seems as though Xbox Gaming will focus on building its self-reliance in the hardware space, instead of relying on third-party vendors, making hardware more readily available and affordable for players to buy, and streamlining its operations, both in terms of development and studio acquisitions.