Xbox CEO Asha Sharma is preparing additional rounds of layoffs that could hit Microsoft's gaming unit this month, again in November, and once more in January, according to a Fortune report. The cuts would extend a restructuring effort Sharma has described as an organizational "reset" at Xbox.
In July, Sharma outlined plans to eliminate 3,200 positions across Microsoft's 2027 fiscal year, including 1,600 cuts announced at that time. Microsoft then laid off roughly 260 employees in September, according to the report. The earlier reductions have already reshaped Xbox's studio roster.
As part of the reset, Double Fine and Compulsion Games have been made independent again. Ninja Theory, the developer behind Senua, may close, according to the report.
The Fortune report also addresses speculation that Xbox could be spun off or sold. Judson Althoff, CEO of Microsoft's commercial business, appeared to minimize that possibility, telling Fortune that Sharma is among the strongest leaders in the entire company and that Microsoft would not have placed her atop a business it planned to sell. Althoff acknowledged there will be considerable speculation and said time will tell, according to the report.
The report further states that Microsoft intends to release a "next-generation handheld device" in 2027 and its Project Helix console in 2028. Those hardware plans would arrive as the company continues to trim staff and adjust its studio lineup.
The layoffs affect Microsoft's US-based gaming workforce and its owned studios, which operate across the US and abroad. Xbox has already seen a new film and TV division launched in October, and State of Decay developer Undead Labs announced layoffs in September as it went independent, completing its separation from Xbox.
Microsoft has not publicly confirmed the timing of any further cuts beyond what Sharma announced in July. The reported rounds would land within the 2027 fiscal year that Sharma's 3,200-position reduction plan covers.
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