--- title: "Microsoft Xbox gives up on the dream of \"the Netflix of gaming,\" laying off 3,200 employees and abandoning five studios" type: "News" locale: "en" url: "https://longbridge.com/en/news/292008598.md" description: "Microsoft announced global layoffs of 4,800 people, including a reduction of 3,200 in the Xbox division and the closure of five studios. This move marks the failure of a subscription strategy that cost nearly $80 billion and aimed to turn Xbox into the \"Netflix of gaming.\" Due to lower-than-expected console sales, slowing growth of Game Pass, and soaring hardware costs, the Xbox business has continued to incur losses, prompting Microsoft to adjust its strategy to improve its financial situation" datetime: "2026-07-08T03:42:46.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/292008598.md) - [en](https://longbridge.com/en/news/292008598.md) - [zh-HK](https://longbridge.com/zh-HK/news/292008598.md) --- # Microsoft Xbox gives up on the dream of "the Netflix of gaming," laying off 3,200 employees and abandoning five studios Microsoft Corp. announced a major organizational restructuring on the 7th, cutting approximately 4,800 positions globally, accounting for about 2.1% of its total workforce. The Xbox gaming division is the hardest hit, with 3,200 employees laid off, representing 20% of its staff, and the abandonment of five game studios. This move by Microsoft effectively acknowledges the failure of its streaming and subscription strategy, which aimed to turn Xbox into the "Netflix of gaming," after spending nearly $80 billion over the past decade. Over the past ten years, Microsoft has engaged in a massive acquisition spree to compete with Sony's PlayStation and Nintendo's Switch. The most notable was the $69 billion acquisition of gaming giant Activision Blizzard nearly three years ago, as well as the acquisition of ZeniMax Media, which owns well-known IPs like The Elder Scrolls (Skyrim). Microsoft originally hoped to drive console sales and attract players to subscribe to Game Pass with its vast game lineup, but the sales of the Xbox Series X/S consoles have not met expectations, and the growth rate of Game Pass has also significantly slowed. Asha Sharma, CEO of Xbox, candidly stated in a letter to employees that the acquisition and subscription strategy "has not grown at the expected pace," leading to a weakening of the core business. Microsoft CEO Satya Nadella also pointed out in a recent podcast that the transformation of departments must be viewed as a sustainable business, humorously noting that creators streaming Xbox content on YouTube earn more than Microsoft itself. Sharma bluntly stated, "Our business today is not healthy." She pointed out that Xbox's profit margins are 3 to 10 times lower than those of similar platforms and publishers, with Xbox losing 64 cents for every dollar invested. Additionally, the gaming industry is facing "the most severe hardware crisis in history," as the cost of console components (especially memory chips) has skyrocketed, keeping hardware costs high. Xbox plans to raise console prices by $100 to $150 (depending on the model) starting August 1. To reverse the decline, Xbox will undergo "the largest restructuring in Xbox history." Of the 3,200 Xbox employees laid off, 1,600 left immediately on the 6th, while the remaining 1,600 will be gradually laid off within the 2027 fiscal year. Xbox will also significantly flatten its management structure, reducing the 14 management levels to no more than five, with an ideal target of three levels. Regarding studios, Microsoft is abandoning five game studios, with four confirmed to be spun off: Compulsion Games and Double Fine Productions will return to independent companies, while Ninja Theory and Undead Labs will be handed over to new management. Xbox will scale back its operations, halting expansionary creative investments that cannot generate platform-level returns, and focus on core strategic pillars such as Mojang, the developer of the Minecraft series, and King, the developer of the Candy Crush series This round of layoffs affects 4,800 people, impacting not only the Xbox division but also the sales team for AI products. Microsoft's Chief Human Resources Officer Amy Coleman stated that the restructuring is in response to changes in customer demand and clarified that AI has not directly replaced employees. Before the layoffs, Microsoft had offered a voluntary retirement plan to approximately 8,750 employees in May, with over 30% of eligible employees accepting the offer. Microsoft is shifting its focus and funding significantly towards artificial intelligence (AI) infrastructure development, forcing its traditional gaming business to undergo a painful "reboot." - Microsoft’s Xbox Layoffs: Failing Streaming Strategy Led to Big Job Cuts - Microsoft cuts 4,800 jobs, including many at Xbox in a ‘reset’ of its gaming division - Microsoft Lays Off Thousands of Xbox Employees, Closes Game Studios - Microsoft lays off nearly 5,000 employees across Xbox, commercial sales - Microsoft axes 4,800 jobs, including major cuts to Xbox - Microsoft lays off nearly 5,000 employees with more expected - Microsoft Layoffs: Xbox cuts 4,800 jobs and plans to spin off five gaming studios (Source of the first image: Unsplash) ### Related Stocks - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [MSFO.US](https://longbridge.com/en/quote/MSFO.US.md) - [MSFU.US](https://longbridge.com/en/quote/MSFU.US.md) - [MSFX.US](https://longbridge.com/en/quote/MSFX.US.md) - [MSFD.US](https://longbridge.com/en/quote/MSFD.US.md) - [MSFL.US](https://longbridge.com/en/quote/MSFL.US.md) - [MSFW.US](https://longbridge.com/en/quote/MSFW.US.md) - [MSFY.US](https://longbridge.com/en/quote/MSFY.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [SONY.US](https://longbridge.com/en/quote/SONY.US.md) - [6758.JP](https://longbridge.com/en/quote/6758.JP.md) - [NTDOY.US](https://longbridge.com/en/quote/NTDOY.US.md) - [7974.JP](https://longbridge.com/en/quote/7974.JP.md) ## Related News & Research - [Microsoft Is Letting Go Employees Amid AI Investments And Xbox Restructuring](https://longbridge.com/en/news/291845965.md) - [Microsoft Cuts 4,800 Jobs As It Restructures Video Game Unit](https://longbridge.com/en/news/291961010.md) - [Microsoft cuts 4,800 jobs across sales and Xbox. 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