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**Microsoft Announces Major Xbox Restructuring With 3,200 Job Cuts and Studio Reorganization**

Microsoft is undertaking one of the biggest transformations in Xbox history, announcing plans to eliminate approximately **3,200 jobs** during fiscal year 2027 as the company reshapes its gaming business for long-term growth. The move follows a broader companywide workforce reduction and reflects mounting pressure from rising game development costs, slower console sales, and changing player behavior.

In an internal message to employees, Xbox CEO Asha Sharma described the initiative as the company's most significant restructuring ever. Around **1,600 positions** will be eliminated immediately, while additional reductions are expected throughout the fiscal year. Several Xbox studios will also undergo ownership changes or transition to independent operations.

According to Microsoft, the restructuring is not driven by employee performance but by the need to create a more sustainable business model. Despite heavy investments in Game Pass, studio acquisitions, and multiplatform publishing, the company said its gaming division has struggled to achieve the level of profitability expected in the current console generation.

As part of the overhaul, **Compulsion Games** and **Double Fine Productions** will become independent studios, while **Ninja Theory**, **Undead Labs**, and **Arkane Studios France** are evaluating strategic alternatives. Microsoft emphasized that no previously announced first-party Xbox games have been canceled.

The company is also simplifying its organizational structure by reducing management layers and streamlining decision-making across the platform. At the same time, Microsoft announced leadership changes, promoting **Helen Chiang** to Chief Operating Officer of Xbox to oversee the company's gaming operations across content, hardware, platform, and services.

Microsoft says the restructuring is designed to position Xbox for future growth as the gaming industry increasingly embraces artificial intelligence, cloud gaming, and evolving player expectations. While the job cuts mark a difficult chapter for thousands of employees, the company maintains that the changes are intended to build a stronger, more competitive Xbox ecosystem for the years ahead.