Microsoft to divest four Xbox studios and cut 3,200 jobs in major restructuring
Microsoft announced a restructuring that will see about 3,200 positions eliminated and four Xbox studios—Double Fine, Compulsion Games, Ninja Theory and Undead Labs—transition to new ownership.
Microsoft said it will cut roughly 3,200 jobs through fiscal year 2027 and transfer ownership of four Xbox studios as part of its largest restructuring effort to date. The moves include the departure of Double Fine Productions and Compulsion Games, which will become independent studios, and the sale of Ninja Theory and Undead Labs to new investors that will fund the completion of Senua and State of Decay 3.
"Our business today is not healthy. We are operating at margins that are 3-10 × lower than comparable platform and publishing businesses," the internal memo said, adding that the company entered the current generation with a smaller install base and higher cost structure.
The company also announced a reduction in management layers, aiming to limit them to five or fewer, and a 50 % cut in vendor spending. Helen Chiang has been promoted to chief operating officer with profit-and-loss responsibility for content, hardware, platform and services.
Mojang and King will now report directly to Xbox CEO, reflecting their size and role as platform businesses. No first-party games have been cancelled as part of the cuts, and Microsoft said it will continue to invest in Xbox with greater focus and discipline to return to growth by 2027.
