Microsoft slashed 4,800 jobs yesterday, eliminating an Xbox corporate vice president who spent 37 years at the company. The cuts hit the gaming division particularly hard: 1,600 roles were terminated immediately, with another 1,600 expected to be cut through the fiscal year.
The layoffs follow a pattern of restructuring under Xbox CEO Asha Sharma, who acknowledged in an internal email that the company's bets on Game Pass, multi-platform content, and a broader portfolio “did not grow at the pace we expected.” Sharma also announced structural changes, including the appointment of Minecraft executive Helen Chiang as the new COO. Chiang will now oversee a unified operating model across content, hardware, platform, and services, replacing the previous siloed studio structure.
Beyond the headcount reductions, several senior leaders have departed. Dave McCarthy, corporate vice president of product services, is leaving after eight years. The shakeup extends beyond Microsoft: OpenAI Chief Futurist Joshua Achiam is also exiting this month after nearly nine years at the AI safety research firm, according to reports.
The gaming industry faces a broader contraction, with Microsoft's 1,600 Xbox-specific layoffs representing a single, stark example. Sharma's email emphasized the need for “clear investment decisions” and accountability, suggesting the cuts are not final. For affected employees, the severance terms remain undisclosed, though Microsoft has offered standard packages in prior rounds.
Some analysts argue that Microsoft's pivot to subscription models like Game Pass may have overextended the company's content spending. Critics note that the layoffs could signal a retreat from aggressive expansion into cloud gaming and third-party publishing, potentially slowing innovation in the sector.