Xbox is set to implement three additional rounds of layoffs.

The wave of layoffs at Xbox Game Studios continues to roll on. Under the leadership of new CEO Asha Sharma, the company has already let go of 1,868 employees since announcing in July that it would be trimming its workforce by 3,200 over the next year. Reports indicate that Sharma is planning three more rounds of layoffs in October, November, and January. This move has particularly impacted long-time employees, which could lead to a significant loss of institutional knowledge.

In a recent statement, Jason Althoff, CEO of Microsoft’s commercial business, addressed the ongoing speculation about a potential spin-off of Xbox, asserting that such rumors are unfounded. “Asha is one of the best leaders we have at the whole company,” he stated. “We would not have put her on a business we intend to sell. There’s going to be a ton of speculation about all this. Time will tell.” Sharma has previously confirmed that the Xbox division is not for sale.

In addition to the layoffs, there are plans for a next-generation handheld device set to launch in 2027, followed by the next major console, Project Helix, in 2028. A recent leak suggested that the upcoming PlayStation 6’s components alone could cost over $680, hinting that the console might retail for more than $1,000. Project Helix is expected to be similarly priced, with estimates suggesting it could reach as high as $1,800.

As part of the restructuring, Xbox has also divested from several well-known studios, including Double Fine, Ninja Theory, Arkane Studios, Compulsion Games, and Undead Labs. Ninja Theory and Arkane are reportedly at risk of closure, while the other three have regained their independence after internal layoffs.

The studios that remain under Microsoft have also seen significant changes. Development of the Halo series is shifting to Activision, with Halo Studios now taking on a support role. Obsidian Entertainment has been placed under Bethesda’s leadership, where they are currently working on a new Fallout title. The workforce at id Software, known for the Doom franchise, has been reduced to a level that may hinder their ability to produce a game of similar scale to Doom: The Dark Ages.

Sharma previously noted in a memo to employees that “our business today is not healthy,” explaining that they are operating at margins significantly lower than those of comparable platform and publishing businesses. She pointed out that entering the current generation with a smaller install base and higher costs has necessitated a shift in strategy, focusing on Game Pass, multi-platform offerings, and a broader content portfolio. While these initiatives have added value, they haven’t grown as quickly as anticipated.

“We must reset Xbox,” Sharma concluded. As we move forward, it’s evident that the impact of this ongoing “reset” will be felt for quite some time.

It’s been a challenging few months for Team Green.