Microsoft cuts 3,200 Xbox positions as leadership signals strategic retreat

Microsoft removed 1,600 Xbox staff in July 2026 and plans another 1,600 layoffs through next fiscal year. CEO Asha Sharma described the division as "not healthy" and "spread too thin." Four game studios face divestment. Project Helix, the next-generation console, won't reach alpha testing until 2027—meaning fewer people must deliver new hardware while the organization undergoes major restructuring.