Xbox Announces ‘Most Significant Restructure’ In Its History As It Plans To Cut 3,200 Jobs; Key Studios Including Double Fine To Be Divested

Xbox CEO Asha Sharma has announced that the console maker is undergoing the “most significant restructure” in the company’s history, with 1,600 layoffs planned and up to another 1,600 job losses over the the next year.

As part of these plans, four major Xbox-owned studio — Ninja Theory, Undead Labs, Compulsion Games, and Double Fine Productions — will either go independent or sold off. Collectively, the four companies employ around 350 people and had been previously heavily rumoured to be in danger of closing.

To break things down a bit more, Nina Theory and Undead Labs are going to be sold to as-yet undisclosed buyers, with Compulsion Games and Double Fine will now become independent studios, retaining full control of their IPs. Meanwhile, Arkane is “beginning required consultation with its Works Council to review potential strategic options,” said Sharma.

Importantly, the executive also noted that no previously announced first-party games are being cancelled as a result of the restructuring process. You can read a snippet of Sharma’s message below, in which she announces that Xbox must be “reset.”

We are beginning the most significant restructure in XBOX history. 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.

I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.

Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.

Xbox recently announced plans to reintroduce console exclusives after previously embracing multiformat development, with Gears of War: E-Day and Clockwork Revolution now only come to Xbox Series X/S and PC. Having said that, it’s still going to be bringing titles to the PS5, with the likes Fable, Halo: Campaign Evolved, and Forza Horizon 6 all coming to Sony’s console.

[Source – Variety]