Microsoft cuts thousands of roles as Xbox faces studio closures

Microsoft plans to eliminate thousands of jobs across sales and consulting as the company's gaming division faces potential studio closures and project cancellations.

Microsoft plans to cut thousands of roles across its sales and consulting divisions, part of a broader restructuring that may shutter as many as five game studios and cancel Marvel's Blade, according to reports from The Verge and Bloomberg.

"This is the biggest single cut series for Xbox," an anonymous insider told GamesBeat, as newly installed Xbox Chief Executive Officer Asha Sharma pushes to make the division the "No. 1 gaming and entertainment company." The cuts, expected to begin July 6, follow Microsoft's elimination of 9,000 gaming staff in July 2025 and 1,900 in January 2024.

The Verge reported that Microsoft is weighing the closure of Arkane Studios, the Lyon, France-based developer of the delayed Marvel's Blade, along with Compulsion Games, Double Fine, Ninja Theory, and Undead Labs. The company is also exploring options to sell some of these studios rather than close them. Marvel's Blade was originally planned for a 2026 launch but slipped to late 2027 and is running over budget, the report said.

The restructuring reflects Sharma's plan to reset Xbox's business model after years of overexpansion during the pandemic. Microsoft acquired Arkane's parent company ZeniMax for $7.5 billion in 2021 and later spent $69 billion on Activision Blizzard. The company's gaming division now spans dozens of studios across Bethesda, Activision, and Blizzard, along with mobile publisher King.

Unionized workers have pushed back against the cuts. The Communications Workers of America, which represents more than 3,500 Microsoft gaming employees who have unionized since 2022, called for immediate bargaining. "They are not short on money," Blizzard senior environment artist Mahreen Fatima said during a CWA-organized call. "Look at the billions that they're using to invest in AI. They're just not choosing to protect us."

Microsoft CEO Satya Nadella earned $96.5 million in Microsoft's fiscal 2025, according to company filings, while the company has committed billions to generative AI infrastructure. The tension between AI investment and workforce reduction mirrors a pattern across the technology sector, where companies have redirected spending toward artificial intelligence while cutting headcount in traditional divisions.

For investors, the restructuring presents a mixed picture. The job cuts could improve operating margins at a company where the gaming division has historically operated on thin profitability. However, the potential loss of studios like Ninja Theory — which just announced Senua at the Xbox Games Showcase — and the cancellation of high-profile projects like Marvel's Blade raise questions about Microsoft's long-term content pipeline. The company's ability to compete with Sony and Nintendo depends on a steady flow of exclusive titles, and studio closures risk creating gaps in release schedules that take years to fill.

This article is for informational purposes only and does not constitute investment advice.