Major restructuring is taking place within Microsoft’s gaming branch, with Xbox CEO Asha Sharma driving the newly announced changes and receiving strong endorsement from CEO Satya Nadella, even as layoffs and studio reorganizations continue.
Nadella Backs Xbox Direction as Division Faces More Layoffs
During a recent appearance on the Sources podcast hosted by Alex Heath, Microsoft CEO Satya Nadella outlined his full support for Xbox’s path forward, highlighting confidence in the brand’s strategy and robust catalog of intellectual properties. Nadella praised the organizational transformation underway, pointing to the significance of these shifts for the future of the Xbox brand and Microsoft’s plans for growth.
He expressed strong satisfaction with the current studio lineup and their portfolio of IP, explaining: “If I look at the studios, the IP portfolio we have, and our ability to then take that and produce great games going forward – I feel fantastic. There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see.” Nadella further emphasized Microsoft’s focus on building a “sustainable business model” to reach more gamers on both Xbox consoles and PC platforms.
Ongoing Restructuring & Studio Realignment
These statements from Nadella come on the heels of fresh reports confirming that the Xbox division is experiencing ongoing job cuts. The most recent round eliminated 268 positions, representing part of what is being described as Microsoft’s “most significant” reorganization within its gaming sector.
Amid these changes, some renowned studios are undergoing closures or major transitions. In particular, Ninja Theory, located in the UK, is likely to shut down following these latest staff reductions. Other developments include Obsidian Entertainment shifting to Bethesda’s management, merging Playground Games with Turn 10 Studios, and restoring independence to Undead Labs (which nevertheless suffered deep layoffs). Meanwhile, Rare, World’s Edge, and the Halo franchise are now under Activision’s operational umbrella. Layoffs have also affected World’s Edge, the team behind Age of Empires and Mythology.
Adapting for Expansion While Reducing Staff
Back in July, Xbox CEO Asha Sharma set out the breadth of the company’s transformation, revealing that 3,200 roles would be cut through an unprecedented restructuring. Out of this total, 1,600 jobs were lost immediately. The restructuring has also enabled several first-party developers, such as Double Fine and Compulsion Games, to resume operating as independent studios.
Amidst this upheaval, Nadella reiterated that Xbox aims to regain momentum during the upcoming fiscal year. He said, “Asha and the team have said that Xbox is going to get back to growth this next fiscal year, and that’s the plan they’re executing on, and in that process, do a bang-up job of producing some great games.”
Xbox’s Future Prospects
These organizational adjustments, combined with public recognition of Asha Sharma’s efforts to “streamline” Xbox, indicate a strategic pivot as Microsoft targets growth with a reshaped gaming unit. Nadella’s reaffirmed commitment and well-defined targets signal a clear focus on keeping up with evolving industry trends, while remaining dedicated to publishing and developing games for key platforms.