Microsoft's gaming division, Xbox, is reportedly preparing for a significant round of layoffs next month, alongside reductions in marketing and other operational budgets. According to a Bloomberg News report published on Wednesday, the restructuring is expected to take place shortly after the end of Microsoft's fiscal year on June 30.
If implemented, the move would be the first major organisational overhaul under Asha Sharma, who became CEO of Xbox in February.
Microsoft has not yet commented on the report and did not immediately respond to a Reuters request for comment.
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Xbox grapples with slowing growth
The gaming business has been under increasing pressure as Microsoft's efforts to expand through subscription services and cloud gaming have not fully compensated for weaker console sales. The division has also struggled with a lack of major blockbuster game releases in recent years.
According to Bloomberg, Sharma outlined the challenges facing the business in an internal email to employees.
She reportedly said that Xbox's accountability margin had fallen to 3%. Sharma also noted that the company had invested more than $20 billion in content, platforms and hardware subsidies over the past five years. Despite those investments, annual revenue declined by nearly half a billion dollars during the same period.
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The report further stated that Sharma told employees Xbox would need to "rebuild its platform infrastructure" and "rethink its portfolio in the weeks and months to come."
Strategy shifts already underway
The exact number of jobs that could be affected remains unclear. The reported layoffs come just months after Microsoft introduced notable changes to its gaming strategy. In April, the company reduced prices for its Game Pass subscription service and ended day-one releases of future Call of Duty titles on the platform.
Those decisions were among the first major strategic moves taken under Sharma's leadership, signaling broader efforts to reshape the Xbox business as it navigates a challenging period for growth and profitability.
