---
title: "Microsoft Cuts About 4,800 Jobs, With Xbox Hit Hard and Studios Facing Closure"
description: "Microsoft is cutting roughly 4,800 jobs across sales, consulting and gaming, with its Xbox division bearing much of the pain as the company moves to shut or sell several studios. Xbox's leadership has cast the retrenchment as a 'reset' of a business it says cannot continue as it is."
category: "Technology"
category_url: https://newsparlor.com/category/technology
author: "Priya Sharma"
published: 2026-07-06T13:18:00.000Z
updated: 2026-07-06T13:18:00.000Z
canonical: https://newsparlor.com/article/microsoft-cuts-about-4-800-jobs-with-xbox-hit-hard-and-studios-facing-closure
tags: ["microsoft", "xbox", "gaming", "layoffs", "technology"]
---
# Microsoft Cuts About 4,800 Jobs, With Xbox Hit Hard and Studios Facing Closure

Microsoft is cutting roughly 4,800 jobs across sales, consulting and gaming, with its Xbox division bearing much of the pain as the company moves to shut or sell several studios. Xbox's leadership has cast the retrenchment as a 'reset' of a business it says cannot continue as it is.

Microsoft is cutting about 4,800 jobs across its sales, consulting and gaming operations, [The Verge reported](https://www.theverge.com/news/961528/microsoft-layoffs-july-2026-sales-xbox), in a fresh round of reductions that falls heavily on its Xbox video-game business. The company is moving to close or sell several of its game studios as part of the retrenchment.

## The scale of the cuts

The reductions are the latest in a series at Microsoft, which has cut thousands of roles across recent years even as it pours money into artificial intelligence. The gaming side is taking a disproportionate share this time. Variety reported the Xbox cuts could reach into the thousands of roles, and the pain is concentrated in the studios Microsoft owns rather than in its platform and services teams.

## Studios on the block

Several development studios are reportedly being shut down or sold. According to [Engadget](https://www.engadget.com/2194941/xbox-closing-ninja-theory-double-fine-compulsion-game-studios/), Microsoft is preparing to close or offload at least three: Double Fine, Ninja Theory and Compulsion Games. Staff at Ninja Theory, the British studio behind the Hellblade series, were told the studio would close and are trying to find a buyer, while the leadership of Double Fine and Compulsion are said to be in talks to buy their studios back from Microsoft. Others under the Xbox Game Studios banner are reported to be negotiating their futures.

The moves follow earlier closures. Microsoft shut Arkane Austin, Alpha Dog Games and The Initiative in the period after its acquisition of Activision Blizzard, and in early 2024 it cut around 1,900 jobs across Xbox and Activision Blizzard.

## A 'reset' of the business

Xbox's leadership has framed the cuts as a deliberate reset. In a memo to staff last month, the Xbox chief executive, Asha Sharma, and the division's chief content officer, Matt Booty, told employees the business had to change, [Game Developer reported](https://www.gamedeveloper.com/business/xbox-announces-business-reset-amid-reports-of-layoffs-and-studio-closures). "It is important to have both optimism and realism as we work to reset the business," they wrote, saying Xbox needed to become more "self-reliant" and to rebuild across hardware, PC, mobile and streaming.

The memo pointed to the underlying strain: the executives said Xbox had spent more than 20 billion dollars on content, platforms and hardware over five years while annual revenue slipped by roughly half a billion dollars, and that rising component costs were adding further pressure.

## The wider picture

The retrenchment lands as Microsoft directs enormous sums toward AI and cloud computing, and as the games industry more broadly contracts after a pandemic-era boom, with layoffs and studio closures across a range of publishers over the past two years. For Microsoft, which spent heavily to build Xbox into a rival to Sony and to absorb Activision Blizzard, the reset is an admission that scale alone has not made the games business pay, and that the company is now willing to shrink it to fix it.

## Sources

- [Microsoft is laying off 4,800 employees](https://www.theverge.com/news/961528/microsoft-layoffs-july-2026-sales-xbox)
- [Xbox is reportedly closing Ninja Theory, Double Fine and Compulsion Games](https://www.engadget.com/2194941/xbox-closing-ninja-theory-double-fine-compulsion-game-studios/)
- [Xbox announces business 'reset' amid reports of layoffs and studio closures](https://www.gamedeveloper.com/business/xbox-announces-business-reset-amid-reports-of-layoffs-and-studio-closures)