Xbox has detailed a broad restructuring plan that will change how Microsoft manages its gaming studios, platform teams, and investment decisions. The overhaul follows the announcement of 3,200 job cuts over the next 12 months, with around half of the affected employees leaving immediately. At least four studios are also departing the Xbox organization as part of the changes.
Xbox CEO Asha Sharma described the overhaul as the most significant restructuring in the history of the business. Her plan is built around three areas: resetting the content portfolio, simplifying the platform, and changing how Xbox operates internally.
The company says the goal is to reduce complexity, improve accountability, and focus investment on projects that have a clearer path to commercial success. However, the scale of the layoffs means the plan will also be judged by how it affects the remaining employees, studios, and games currently in development.
Xbox will review its studios and content investments
The first part of the plan focuses on the content portfolio. Xbox intends to reduce spending in some areas while moving money and staff toward projects considered more important.
Sharma acknowledged that Microsoft is not always the right owner for every type of development studio. She also said Xbox lost 64 cents for every dollar invested during a typical year, showing that parts of the existing studio model were financially unsustainable.
The reductions will affect several parts of Microsoft’s gaming operation, including Activision, Bethesda, Blizzard, King, Mojang, and Xbox Game Studios. The size of the changes will differ between teams.
Mojang and King will now report directly to Sharma. Both businesses have large monthly audiences through Minecraft and Candy Crush, and Microsoft increasingly views them as platforms rather than traditional game studios.
| Area of the reset | Main objective |
|---|---|
| Content portfolio | Reduce weaker investments and focus on higher priority projects |
| Xbox platform | Simplify decisions, tools, and feature development |
| Internal operations | Improve accountability and bring the business under one model |
| Leadership structure | Give one executive responsibility across content, hardware, services, and platform |
| Spending | Reduce vendor costs and remove unnecessary management layers |
Microsoft wants fewer management layers and faster decisions
The second part of the plan addresses the way Xbox develops and manages its platform.
Some work currently passes through as many as 14 layers of management. Microsoft says its platform teams are also 40 percent larger than they were at the beginning of the current console generation, even though the player base and total playtime have declined.
According to Sharma, this structure has slowed decisions and made it difficult to identify who is responsible for specific outcomes. Xbox now plans to create a flatter organization with fewer approval stages.
The new structure will place greater responsibility on individual contributors, working managers, and directly responsible individuals who will own major decisions. Microsoft also intends to use more shared services, clean up its code base, and reduce vendor spending by 50 percent.
The company believes these changes will help teams release features more efficiently and respond faster when projects encounter problems. Whether this improves the experience for players will depend on how the plan is carried out.
A new operating model will cover the entire Xbox business
The third part of the reset focuses on bringing Xbox’s different divisions together.
Microsoft says the gaming organization became fragmented as it expanded. Studios, hardware teams, platform groups, and service businesses often worked independently, which made shared planning more difficult.
Helen Chiang has been promoted to Chief Operating Officer and will hold financial responsibility across content, hardware, platform, and services. She previously worked on Xbox Live and led Mojang and the Minecraft franchise.
Under the new model, Chiang will oversee investment decisions across the wider Xbox business and help create a common operating structure. Microsoft expects this to improve coordination and make it easier to measure whether projects are meeting financial and strategic goals.
Xbox also has an ambitious long term goal of reaching more than one billion people every day. Achieving that would require growth beyond traditional consoles, with a stronger focus on PC, mobile games, cloud services, and large franchises such as Minecraft and Candy Crush.
The restructuring provides a clearer picture of how Xbox plans to operate, but its success remains uncertain. Microsoft must now show that a smaller and simpler organization can release better games, improve its platform, and rebuild confidence without creating further instability for its development teams.
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