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Xbox Fires 3,200 Workers in Brutal Reset as Fears of Collapse Grow - console|
| (hx) 03:31 PM CEST - Jul,15 2026 | 
Microsoft’s Xbox division has laid off around 3,200 employees - nearly 20% of its workforce (thanks SABOT) - under new CEO Asha Sharma as part of a sweeping "business reset."
The cuts began this week with 1,600 immediate layoffs, with another 1,600 planned over the next year, alongside the sale of four studios.
In her internal memo, Sharma described the current Xbox business as "not healthy," citing razor-thin profit margins after years of heavy spending on acquisitions like Activision Blizzard and the broad Game Pass strategy.
A former Xbox employee warned publicly that "the entire thing is going to fall apart," voicing concerns shared by many current and former staff.
The move has sparked backlash online, particularly on Reddit, where users have criticized Microsoft for laying off American workers while continuing to hire foreign talent through H-1B visas.
Xbox claims the restructuring will allow the company to focus resources on its biggest franchises, such as Fallout and The Elder Scrolls, for faster and higher-quality releases.
However, many observers fear that cutting experienced teams - including those working on key engines and long-running projects - could further damage development quality and long-term prospects.
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