Microsoft's gaming unit is preparing a restructuring that is expected to include major layoffs next month and reductions to marketing and other budgets. The planned cuts come as Xbox grapples with weaker console sales, pressure on its subscription and cloud strategy, and falling revenue over the past five years.
Highlights
- Microsoft's Xbox division plans major layoffs and deep budget cuts in marketing and other areas shortly after June 30, following fiscal year end.
- Asha Sharma, Xbox CEO since February, told staff that Xbox's accountability margin has dropped to 3% and over $20 billion was spent on content, platforms, and subsidies in five years.
- Annual Xbox revenue declined by nearly $500 million despite heavy investment, prompting price cuts for Game Pass and ending day-one 'Call of Duty' releases in April.
Restructuring plan and timing
As first reported by Bloomberg News, Microsoft's Xbox division is planning major job cuts next month, alongside significant reductions in marketing and other spending. The exact scale of the layoffs is not yet clear, but the report says the moves are expected shortly after the close of Microsoft's fiscal year on June 30.The restructuring would be the first major overhaul under Asha Sharma, who took charge as CEO of the gaming unit in February. Microsoft does not immediately respond to a Reuters request for comment.
Pressure on Xbox strategy and operations
Xbox has faced mounting challenges in recent years as Microsoft's push into subscriptions and cloud gaming fails to offset declining console sales and a shortage of blockbuster titles. Bloomberg, citing an internal email to employees, reports that Sharma says Xbox's accountability margin has fallen to 3% and that the company has spent more than $20 billion on content, platforms and hardware subsidies over the past five years, even as annual revenue declines by nearly half a billion over that period.Sharma says Xbox needs to rebuild its platform infrastructure and rethink its portfolio in the weeks and months ahead. In April, Microsoft lowers prices for its Game Pass service and ends day-one releases of future "Call of Duty" titles on the platform, marking one of the first major strategy changes under the new gaming chief.
Our earlier coverage of Honeywell’s restructuring focused on the company’s plan to spin off its aerospace division into a standalone public business by June 2026, alongside a broader rebrand and strategic realignment. We also noted that despite reaffirming its outlook and posting an earnings beat, Honeywell’s shares remained under pressure, with technical indicators pointing to persistent bearish momentum.
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