Microsoft to cut 3,200 Xbox jobs by July 2027 as CEO calls division 'not healthy'

Microsoft laid off 1,600 Xbox employees in early July 2026 and plans another 1,600 cuts over the next fiscal year. CEO Asha Sharma, in an internal memo, said the division is "not healthy" and "spread ourselves too thin." The company is divesting at least four studios. Project Helix, Xbox's next-generation console, won't reach alpha until 2027—leaving a shrinking organization to deliver new hardware amid major restructuring.