Microsoft’s Xbox division is expected to undergo significant layoffs this summer as the gaming department undergoes a “reset.”
First reported by Bloomberg, Xbox could face thousands of layoffs over the next 100 days as new leadership works to overhaul the business. The layoffs are expected to start in early July, as Microsoft’s fiscal year ends on June 30.
The reports of upcoming layoffs come just months after Asha Sharma became the latest CEO of Xbox in February. Xbox executives stated it has invested more than $20 billion over the past five years, while revenue has declined by approximately half a billion.
Microsoft has not confirmed the layoffs, but did confirm that significant changes are needed for Xbox’s future. According to Sharma, Xbox needs to rethink its portfolio in the coming weeks and months.
A significant portion of Xbox’s employees work at the Microsoft campus in Redmond. It is unknown how many Puget Sound-area employees will be affected by the upcoming layoffs, as of this reporting.
Xbox hardware struggles
Xbox has been struggling to sell its hardware of late, with a 29% year-over-year decline in quarter one (Q1) of 2026, according to IGN. In Q4 of 2025, hardware sales were down 22% as well. From Q2 2024 through Q3 2025, Xbox’s hardware revenue was down at least 29% in each quarter, with a whopping 42% revenue decline in Q4 2024.
Microsoft initially released its highly coveted Xbox in 2001, after Sony’s PlayStation already held a majority share of the gaming console market, competing with the likes of Nintendo’s Nintendo 64 and Sega’s Saturn.
Since its inception, the Xbox has seen three additional generations, with the Xbox 360 releasing in 2005, the Xbox One in 2013, and the Xbox Series S and Series X releasing in 2020.
Although no release date has been announced for Xbox’s fifth-generation console, production is underway and it will feature significant upgrades over previous models.
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