Xbox is reportedly preparing another major round of layoffs in July, shortly after CEO Asha Sharma told employees that Microsoft's gaming business needs a broad reset. The number of jobs at risk has not been reported, but Bloomberg says the cuts are expected after Microsoft's fiscal year closes on June 30.
The report follows Sharma's public staff memo, which Microsoft posted on Xbox Wire. In it, Sharma said Xbox will end the fiscal year at about a 3% accountability margin, down year over year, while annual revenue outside Activision Blizzard King has declined by nearly half a billion dollars over the past five years despite more than $20 billion in spending on content, platform work and hardware subsidies.
That makes the reported layoffs part of a wider pressure point for Xbox, not a one-off staffing story. Sharma's memo also said Xbox has become overextended across subscription, streaming and device strategies, and that the company needs to reassess its studio system, portfolio balance and investment priorities for the next five years.
Xbox's reset now has a staffing shadow
Microsoft has not announced the reported cuts, and the exact scope remains unclear. Bloomberg's report, as summarized by Reuters and other outlets, says Xbox is also planning significant reductions to marketing and other budgets as Sharma reshapes the division.
The timing is sharp because Xbox just used its June showcase to sell a more focused future, including Gears of War: E-Day in 2026 and Clockwork Revolution in 2027. Sharma's own memo praised that first-party slate, but it also said Xbox has not adequately funded some of its biggest franchises to compete and win.
Gamers Now covered the same reset memo earlier this week through its hardware, Game Pass and platform implications. The reported layoff plan adds a harder business consequence to that reset, especially for studios and teams waiting to learn which projects will survive the new spending review.
Xbox has been through several years of cuts, including layoffs across Xbox, Bethesda and Activision Blizzard. If this new round goes ahead in July, it would be the first major restructuring under Sharma, who took over the gaming unit in February.