Xbox said on July 6, 2026, that it was beginning its biggest internal reset yet, with about 3,200 jobs cut across FY27 and roughly 1,600 roles eliminated right away. The memo also said four studios would move to new management.
The note pointed to a business that has been under pressure for a while. Xbox described its margins as far below those of similar platform and publishing businesses, and said its Gen 9 strategy, built around Game Pass, multi-platform releases, and a wider content slate, had not grown as fast as expected.
That reset reaches deep into the studio side. Compulsion Games and Double Fine Productions will become independent studios with their IP, catalog, and runway for future games. Ninja Theory and Undead Labs are moving under new ownership with funding in place to finish and grow Senua and State of Decay 3. In France, Arkane’s management has begun consultation with its Works Council over possible strategic options.
Xbox also said no first-party publicly announced games or projects are being canceled as part of these cuts. Even so, the memo makes clear that investment is being pulled around the company, with changes across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Mojang and King will now report directly to Asha.
On the operating side, Xbox plans to cut management layers to no more than five, and where possible, three. Helen Chiang has been promoted to chief operating officer with end-to-end P&L responsibility across content, hardware, platform, and services, while Dave McCarthy is retiring after 17 years at Xbox. Asha said the company will keep investing heavily in 2026 and wants to return to growth in 2027.
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Source: Xbox Wire
