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Xbox CEO Asha Sharma announces three resets to manage crisis as firm lays off 3,200 employees
In a big overhaul, Microsoft is reportedly planning to downsize by 4,800 people, approximately 3,200 gaming jobs from Xbox among them.
Xbox CEO Asha Sharma became the bearer of bad news on Monday as she announced the firm's decision to cut 3,200 jobs. As she admitted some big setbacks for Xbox in the recent past, she also put forth three major plans to mitigate the challenges.
In an email sent to employees, Sharma announced plans to reset Xbox's content portfolio, operations and platform. She admitted that the firm's business was “not healthy” and that it was operating at margins 3-10 times lower than its competitors.
Here are the three big resets announced by Asha Sharma:
- Four studios let go: Apart from the layoffs, four studios will leave Xbox as part of the restructuring. Asha Sharma said that the firm has “aggressively expanded” its studio portfolio since 2018 but has come to realise that owning every independent studio is not desirable. “We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested,” Asha Sharma said. While Compulsion Games and Double Fine Productions will go independent and retain their intellectual property, Ninja Theory and Undead Labs will be joining new owners to continue operations with a different funding source. The Xbox CEO also said that Mojang and King have been profitable and are largest by monthly active players, and will now report directly to her.
- Maximum 5 management layers: Sharma also said that the firm has expanded in terms of management layers over the years and has realised that it is vital to simplify hierarchy. She said that Xbox teams are 40% larger than they were at the start of this generation and in some parts of the company, work passes through as many as 14 layers of management. Doing away with the system, the management layers will be reduced to maximum five, and even three wherever possible. “We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes,” Sharma said.
- Big role announcement: As part of the third reset, which is to improve operations, Asha Sharma announced the appointment of a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang will take over the role and will be reporting directly to Asha Sharma. “Teams, studios, and functions often operate independently, and it became harder to work towards a shared goal, make the right tradeoffs, and get things done,” Sharma said.
Xbox is a gaming giant owned by Microsoft. In a big overhaul, Microsoft is reportedly planning to downsize by 4,800 people, approximately 3,200 gaming jobs from Xbox among them.
Xbox employees have been informed that 1,600 of these jobs would be cut immediately, with the remaining layoffs to follow through fiscal year 2027.
