Microsoft is cutting 4,800 jobs and reshaping its Xbox business in one of its largest workforce cuts this year, a move that will eliminate thousands of gaming division roles and spin off four studios from the company.
The tech giant announced the cuts on Monday, July 6, saying about 2% of its workforce would be affected. Xbox is expected to be responsible for about 3,200 layoffs, with additional job losses planned through fiscal 2027 as the company restructures its gaming operations under CEO Asha Sharma.
“The way technology is built, deployed, and used is changing faster than at any time in my time,” Microsoft Chief People Officer Amy Coleman wrote in a message to employees announcing the layoffs.
Xbox will have to lose almost a fifth of the workforce
In a separate message to Xbox employees, CEO Asha Sharma said the restructuring of the gaming division would ultimately eliminate about 3,200 jobs, including the 1,600 employees laid off on July 6.
“I recognize that a one-year restructuring creates additional challenges,” Sharma wrote. “Unfortunately, it is not possible to make all the necessary changes in a single day.”
Sharma, a former Meta and Instacart executive, took over as Xbox CEO in February following the retirement of longtime gaming chief Phil Spencer.
Four studios will be closed
In addition to the workforce cuts, Microsoft is also cutting ties with four game studios. According to Sharma, Compulsion Games and Double Fine Productions will become independent companies. Meanwhile, Ninja Theory and Undead Labs have entered into agreements to move under new ownership.
The move is one of the most significant changes for Xbox in recent years, affecting both staffing and Microsoft’s portfolio of game developers.
Layoffs follow employee buyouts
The latest cuts come just months after Microsoft offered voluntary buyouts to about 7% of its US workforce in April.
Coleman said more than a third of eligible employees have accepted those offers and indicated the company may consider similar programs again.
“Decisions like this are never easy, and I have a commitment that we will continually look for ways to reduce the need for job terminations,” Coleman wrote.
This article originally appeared on USA TODAY. Reporting by Fernando Cervantes Jr., USA TODAY via USA TODAY Network/Reuters Connect.