Xbox Layoffs Loom as CEO Sharma Admits Division Is Over-Extended

The curtain is rising on what could be Xbox’s most dramatic act yet, and nobody in the audience looks happy.

According to GameSpot, citing sources who spoke to Bloomberg’s Jason Schreier, Microsoft is planning major layoffs at its Xbox division sometime after June 30, the date its fiscal year closes. The cuts are expected to be significant. How significant? Nobody is saying a number yet. That silence, dear readers, is its own kind of answer.

The layoffs arrive on the heels of a remarkable piece of corporate candor from new Xbox CEO Asha Sharma. In an email sent to employees, Sharma acknowledged that annual revenue had fallen “nearly half a billion” over five years, even as Microsoft poured more than $20 billion into the Xbox brand (excluding Activision Blizzard King). She said the division had become “over extended,” that the current margins “cannot continue,” and that the business “isn’t particularly healthy.” As Video Games Chronicle frames it, this would mark significant cuts for the fourth year running. Four years. Four acts of the same tragedy.

Push Square raises the stakes further, reporting the layoffs could involve a studio closure. This lands in the same week Xbox announced several new titles coming to PS5, including State of Decay 3 and Senua, which has already left some employees, per Push Square, shocked by the Gears of War PS5 cancellation buried inside that same news cycle.

Shipping games to PlayStation while shuttering studios that make them. There is a word for that kind of irony, and it isn’t pretty.

Sharma’s message, per Wccftech, reportedly tells staff the division needs to “reassess our priorities.” That phrase will land differently depending on whether you are a Microsoft executive in a Redmond boardroom or a developer wondering if your badge still works on July 1. The date approaches. The curtain has not fallen yet.