CEO Asha Sharma Declares Xbox “Not Healthy” and Launches a Complete Reset. Double Fine, Compulsion, Ninja Theory, Undead Labs and Arkane Lyon All Exit Microsoft Ownership
Microsoft’s Xbox plans to eliminate 3,200 jobs around 20% of its staff over the next year, as part of a massive reorganisation to spur growth in the struggling gaming division.
Xbox will also divest four of its video-game development studios and is beginning the process to part ways with a fifth. “Our business today is not healthy,”
Chief Executive Officer Asha Sharma wrote in a note to staff Monday morning, adding that Xbox is operating at margins three to ten times lower than comparable businesses. Bloomberg
Double Fine Productions and Compulsion Games will return to independence, each given runway funding by Microsoft to begin their next projects while seeking additional financing, retaining all their IP and back catalogues.
Ninja Theory and Undead Labs have found new owners, though deals have not yet closed, both retain their IP. Arkane Lyon is entering the same divestiture process. At Xbox, 1,600 jobs were eliminated Monday, with the rest to follow over the next 12 months.
No previously announced first-party games or projects are being cancelled. Content spend for FY2027 will remain at record levels, but with Minecraft and Elder Scrolls prioritised as major growth areas. Mojang and King will now report directly to Sharma.
Xbox spent $75 billion acquiring Activision Blizzard. Three years later its CEO is publicly admitting the business is unhealthy. The studios sold are not failures; Dishonored, Hellblade, and Psychonauts are among gaming’s most critically acclaimed franchises. This is a structural admission that Microsoft’s gaming strategy was wrong, not that the games were bad.
Check out our previous coverage of Microsoft, Xbox and the gaming industry on The Trusted Times.
