Xbox prepares layoffs and a strategy review amid falling revenues

Microsoft’s gaming division Xbox plans staff cuts as early as July. New Xbox CEO Asha Sharma also intends to cut marketing budgets and reassess the business strategy.

Bloomberg reports.

The outlet writes that the company is trying to address problems that have accumulated in recent years. Despite multibillion-dollar investments in games, the platform and hardware, Xbox revenues are declining, and console sales and the growth rate of the Game Pass service have slowed.

What is known about layoffs at Xbox

According to Bloomberg, the cuts may begin after Microsoft’s fiscal year ends on June 30. The exact number of employees who will be affected is currently unknown.

At the same time, the company plans to significantly reduce spending on marketing and certain areas of activity.

New head of Xbox Asha Sharma, who took over the division in February, told employees that the business is “not in the best shape” and needs a reset.

She said that over the past five years Xbox invested more than $20 billion in content, the platform and subsidizing console production, yet the company’s annual revenue over that period has declined by nearly $500 million.

Among other problems, Xbox is cited as facing falling console sales, a lack of major gaming hits, and stagnation of the Game Pass subscription service.

Over the past two years the company has already closed studios, canceled projects and raised prices on its products.

More about Xbox

Xbox — is a gaming brand and ecosystem from Microsoft. 

In April 2026 Microsoft returned the Xbox brand to its gaming division instead of Microsoft Gaming.

The return to the Xbox division is part of a promise by the company’s CEO Asha Sharma about a “return of Xbox” strategy. This move is meant to put fans first and correct previous strategic mistakes. 

Additionally, in early May this year the company announced that it will release a limited collection of transparent Series X25 consoles to mark the brand’s 25th anniversary. 

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