Microsoft Announces Major 'Xbox Reset' with Studio Closures and Layoffs on the Horizon
Xbox Announces Major Restructuring
Microsoft is implementing sweeping changes to its Xbox division, with a memo sent to staff on June 10th outlining what leadership describes as an "Xbox reset." The announcement comes as new CEO Asha Sharma, who took over a few months prior, and newly-promoted chief content officer Matt Booty address significant challenges facing the gaming business.
Key Challenges Cited
The internal memo highlighted several pressing issues:
- A 3 percent "accountability margin" shortfall
- Massively higher component prices for consoles due to memory and storage shortages
- An "over extended" studio system requiring consolidation
Planned Changes
Reports indicate that Microsoft is planning to announce layoffs on July 6th, with the cuts potentially including:
- Closure of at least five studios
- Possible cancellation of projects like the Blade game
- Potential shuttering of studios including Arkane and Ninja Theory, the creator of Hellblade
Recent Precedents
Under Sharma's leadership, Xbox has already implemented other significant changes:
- Price hikes for Xbox consoles (an additional $100 or more)
- Restructured Game Pass pricing, including removal of new Call of Duty games from the service
- Rebranding from Xbox to "XBOX"
- Announced console exclusivity for titles like Gears of War: E-Day and Clockwork Revolution
Notably, Microsoft has confirmed that Hideo Kojima's OD will still be published despite the broader restructuring.
Industry Context
The restructuring comes amid broader challenges in the gaming industry, including supply chain pressures and the need to optimize an expanded studio portfolio following years of acquisitions. The 3 percent accountability margin suggests the division is working to meet specific financial targets after previous growth investments.