Microsoft to cut 4,800 jobs in major Xbox and gaming division 'reset'

July 7, 2026 - 00:54

Microsoft has announced it will cut 4,800 positions across its Xbox and broader gaming divisions, marking a significant restructuring effort the company describes as a "reset" of its gaming strategy. The layoffs come on the heels of a voluntary buyout program that Microsoft launched in May, which targeted roughly 8,750 employees. Those buyouts were offered as part of an earlier cost-cutting push, but the latest round of job cuts appears to be more targeted and permanent.

The reductions will affect teams working on game development, publishing, and operational support within the Xbox ecosystem. Microsoft has not specified which studios or projects will bear the brunt of the cuts, but the move signals a shift in priorities as the company looks to streamline its gaming operations. The decision follows a period of aggressive expansion for Xbox, including the massive acquisition of Activision Blizzard for nearly $69 billion, which closed in October 2023.

Analysts note that the gaming industry has been under pressure to tighten budgets after years of rapid growth during the pandemic. Microsoft's move mirrors similar layoffs at Sony, Electronic Arts, and other major publishers. The company has stated that the cuts are necessary to align its workforce with a "sustainable growth model" and to focus on key franchises and subscription services like Game Pass. Affected employees will receive severance packages and career transition support, according to internal memos.