Microsoft CEO Satya Nadella has described the ongoing restructuring of Xbox as “great to see,” even as another 268 positions are being eliminated across the gaming business.
The latest cuts follow roughly 1,600 Xbox job reductions announced in July. Microsoft’s broader restructuring plan has targeted around 3,200 roles across fiscal 2027, although more recent reporting suggests the final number could end up below that original estimate as some employees are moved elsewhere inside the company.
Nadella said Xbox still has a strong collection of studios and intellectual property, while stressing that Microsoft must build a sustainable business model capable of delivering games to more people.
| Detail | Current information |
|---|---|
| Latest reported Xbox cuts | 268 roles |
| Earlier July cuts | About 1,600 roles |
| Original restructuring target | Around 3,200 roles during FY27 |
| Xbox CEO | Asha Sharma |
| Microsoft CEO | Satya Nadella |
| Growth target | Return Xbox to growth in fiscal 2027 |
| Microsoft strategy | Publisher and platform provider across PC and Xbox |
Nadella supports the restructuring led by Asha Sharma
During a recent interview, Nadella discussed the changes being carried out by Xbox CEO Asha Sharma and her team.
He said there was “some amount of streamlining” underway and described that work as “great to see.”
The wording is notable because the restructuring has included substantial job losses across Microsoft’s gaming organization.
The latest round affects 268 positions and follows the much larger cuts announced earlier in the year. Reporting indicates that the reductions are part of the broader Xbox reset rather than a separate cost cutting program.
Microsoft still sees gaming as part of its core business
Nadella said gaming remains part of Microsoft’s long term identity.
He pointed to Microsoft’s history with games such as Flight Simulator and compared gaming with other areas that have long been central to the company, including developer tools and productivity software.
He also said he feels confident about the intellectual property Microsoft currently owns and its ability to produce future games.
Microsoft has spent heavily expanding that portfolio through acquisitions, including Bethesda parent ZeniMax and Activision Blizzard.
Xbox is being reorganized around larger franchises
The restructuring is changing how Microsoft manages several of its most important gaming properties.
Recent changes have moved responsibility for Halo toward Activision, while Rare and World’s Edge are also being reorganized under Activision. Obsidian is being aligned more closely with Bethesda, and Playground Games and Turn 10 are being combined around Microsoft's major racing and role playing projects.
Several studios have also been moved outside Microsoft or placed under review.
Double Fine and Compulsion Games have become independent, while the future of other studios has remained less certain during the restructuring.
Microsoft wants Xbox back to growth in fiscal 2027
Nadella said Sharma and her team expect Xbox to return to growth during the next fiscal year.
That target is consistent with Microsoft’s own earnings commentary.
During its fiscal 2026 fourth quarter earnings call, Microsoft said it was making changes across Xbox content, platforms, and operations to reset the business for long term growth and expected gaming to return to growth in fiscal 2027.
The company is therefore trying to reduce costs while reorganizing teams around franchises and businesses it believes can produce stronger returns.
Sustainability has become a central issue for Xbox
The restructuring comes after years of major investment in gaming.
Microsoft has expanded Xbox through studio acquisitions, Game Pass, cloud gaming, PC publishing, and new hardware development.
However, the company is now putting greater emphasis on financial sustainability.
Earlier restructuring documents indicated that Microsoft viewed Xbox as overextended and planned significant workforce reductions as part of an effort to improve the division’s economics.
Nadella said Microsoft wants to remain both a strong game publisher and a platform provider across PC and Xbox.
That suggests the company is not abandoning gaming, but it is changing how resources are allocated.
More changes could still come
The restructuring is not finished.
The original plan called for cuts and organizational changes throughout fiscal 2027, which runs until June 2027. More recent reporting suggests Microsoft may reduce fewer than the originally planned 3,200 positions if enough roles can be reassigned rather than eliminated.
For now, Microsoft’s strategy is centered on reducing operating complexity, concentrating resources around its largest franchises, and returning Xbox to growth.
Nadella’s comments make clear that senior leadership supports that direction, even as the human impact of the restructuring continues through further job losses.
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