Xbox’s Asha Sharma: No Announced Games Cancelled Despite Layoffs, Studio Sell-Offs
Xbox CEO Asha Sharma has confirmed that no publicly announced first-party game or project is being cancelled as part of the console maker’s deepest restructuring in its 25-year history, even as roughly 3,200 jobs are cut and four studios are spun off from Microsoft. Sharma said the cuts reach across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, though no publicly announced games are being cancelled.
“None of our first-party publicly announced games or projects is being cancelled as part of these reductions,” Sharma wrote in a statement, according to Insider Gaming, easing fears that had built up over weeks of speculation about possible studio closures.
3,200 Jobs Cut Through FY27, With 1,600 Effective This Week
As detailed in a memo to employees, the changes include roughly 3,200 job cuts through the fiscal year, about 20% of the Xbox workforce, the spinoff of four game studios, a new COO, and a plan to flatten management from as many as 14 layers to no more than five. Forbes reported that Xbox CEO Asha Sharma has announced that Microsoft will lay off around 3,200 workers over the next fiscal year, with 1,600 roles being affected today alone.
Sharma didn’t shy away from the scale of the reset. Xbox CEO Asha Sharma laid out a wide-ranging plan to overhaul Microsoft’s gaming division, calling it the most significant restructuring in Xbox history and disclosing that the business has been losing 64 cents on every dollar invested in its game studios. Fortune separately confirmed the headline figures, reporting that Sharma unveiled sweeping changes at the gaming unit Monday, primarily layoffs that will affect roughly 3,200 people, or 20% of staff—1,600 employees will be affected immediately, and the other 1,600 are expected to be cut over the next year.
Compulsion, Double Fine, Ninja Theory and Undead Labs Cut Loose
Four studios are leaving Microsoft’s roster as independent or externally owned ventures rather than being shut down outright. XBOX is selling off four studios in Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, while Arkane Studios is “beginning required consultation with its Works Council.”
Crucially, the studios appear to be keeping their current projects rather than having them scrapped. Several game studios will be spun out as standalone ventures, removing the costs from Microsoft’s books while giving the studios a chance to survive on their own, with Compulsion Games (South of Midnight) and Double Fine Productions (Psychonauts) returning to their management teams as independent studios, keeping their intellectual property and current projects. Forbes added that the statement indicates Ninja Theory and Undead Labs will have the funding to finish projects like Senua and State of Decay 3.
Helen Chiang Becomes Xbox’s First Chief Operating Officer
Alongside the cuts, Sharma is installing a new executive layer to oversee day-to-day operations. Helen Chiang, currently the corporate vice president of Minecraft, will become Xbox’s first chief operating officer. Fortune reported that for the first time, Xbox is also installing a chief operating officer, Helen Chiang, who will be accountable for profits and losses across its content, hardware, platform, and services businesses, with major assets such as Candy Crush-maker King and Minecraft-maker Mojang Studios now reporting directly to Sharma.
Sharma has also promised structural simplification beyond the org chart. Sharma wrote that Xbox’s platform teams are 40% larger than they were at the start of this generation, even as its player base and playtime have declined, and that the company will reduce management layers to no more than five, and where possible, three.
Xbox’s Share of Microsoft Revenue Falls to 6% Amid Hardware Slump
The reset lands against a backdrop of shrinking financial relevance for Xbox within Microsoft overall. Xbox is only 6% of Microsoft’s revenue, but one of its best-known consumer brands. Sharma’s predecessor era had already seen steep declines, with Xbox hardware revenue falling 33% year-over-year, with content and services down another 5%, according to Microsoft’s most recent earnings report cited by Fortune.
CNBC reported similar strain on console sales, noting that the Nintendo Switch and Switch 2 and Sony PlayStation 5 outsold Microsoft’s Xbox Series X and Series S consoles in the first quarter, according to data from video game website VGChartz. Sharma, who took the top job on February 20, 2026, succeeding longtime Xbox chief Phil Spencer, has framed the restructuring as a rebuild rather than a retreat, telling staff, as Fortune quoted, “we spread ourselves too thin.”
The scale of this week’s cuts echoes, but does not yet match, the fallout from Microsoft’s previous Xbox layoff round a year earlier. That 2025 round shuttered The Initiative, which was working on a Perfect Dark game, and canceled Rare’s Everwild. Whether the current “no cancellations” pledge holds up over the rest of FY27, with another 1,600 job losses still to come, will be the real test of Sharma’s promise to Xbox’s playerbase.
Read also: Id Software Says Xbox Layoffs Shrank Studio to DOOM 2016-Era Size
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