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announced a major restructuring, reducing its headcount by 3,200 employees throughout fiscal year 2027, with 1,600 roles eliminated today. Four studios—
Both Compulsion Games and Double Fine Productions will become independent again, returning to their original management along with their “[intellectual properties], catalog, and runway for their next games.”
Ninja Theory and Undead Labs have entered terms to join new ownership “with funding to complete and grow” their upcoming games,
According to Xbox CEO Asha Sharma, the Xbox business today is “not healthy,” with operating margins being “[three to 10 times] lower than comparable platform and publishing businesses.” And bets on “Game Pass, multiplatform, and a broader portfolio of content” did not meet expectations.
Since 2018, Xbox has “aggressively” expanded its studio portfolio, and in a typical year, “lost 64 cents for every dollar we invested.”
As Xbox ‘resets,’ it will reduce its management layers from as many as 14 levels to a maximum of five—or three, where possible.
Dave McCarthy, who has been at Xbox for 17 years, will retire as chief operating officer, and Helen Chiang will take his place, overseeing content, hardware, platform, and services with “end-to-end [profit and loss] responsibility.”
“These changes are about a bigger future for Xbox, not a smaller one,” said Sharma. “The next decade of gaming will be larger, more global, and more creative than anything we’ve seen before. This year, we’ll invest as much in Xbox as we ever have, but we’ll invest with greater focus, greater discipline, and greater clarity, all in service of making Xbox where the world plays and creates.
