The rumored ‘bloodbath’ at Xbox has arrived now that the holiday weekend is over and Microsoft is laying off thousands of staff and selling off Xbox Game Studios teams.

‘I know this is Painful’ Says Asha Sharma

Asha Sharma’s Xbox reign is still just starting, but it’s already been one of the most dramatic for the brand. After a first 100 days full of fan service announcements and promises of redefining the brand, it looks like the next 100 days are going to be much darker.

Asha Sharma shared a lengthy blog post detailing the main cuts and changes she is implementing as she attempts to “reset Xbox.” As expected, these changes will include massive layoffs and the loss of some major studios from Xbox’s portfolio.

“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. I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.”

As many early reports predicted, Double Fine and Compulsion Games have been negotiating to transition back to independent studios. Ninja Theory and Undead Labs were also impacted by this decision.

“Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.”

Sharma’s post went on to explain that other studios are being impacted as well, even if they aren’t being sold off or shuttered.

“We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. None of our first party publicly announced games or projects are being cancelled as part of these reductions.”

All of these changes will take a while to play out, but there’s no denying that this is one of the largest layoffs in video game history. Only time will tell if this move actually moves the needle in terms of successfully “reseting Xbox.”

Be sure to check back soon for more news and updates on the future of Xbox.

This is a developing story…