Microsoft Looks to Make a Major Reset as It Says This Area of Its Business "Is Not Healthy"

Microsoft is cutting 4,800 jobs—2% of its workforce—with 3,200 of those eliminations hitting its Xbox division. Xbox CEO Asha Sharma called the gaming business "not healthy," revealing the unit loses 64 cents for every dollar invested. The restructuring targets management bloat and aims to restore competitiveness in a segment facing declining revenue.

The cuts mark a significant reset for Microsoft's gaming ambitions. The company has poured resources into Xbox hardware, Game Pass subscriptions, and major studio acquisitions, yet Sharma's stark assessment underscores persistent profitability challenges. The 64-cent-per-dollar loss metric points to fundamental margin issues that go beyond typical cyclical headwinds.

Microsoft has not disclosed a timeline for the restructuring or quantified expected cost savings. The 3,200 Xbox layoffs represent a meaningful portion of the gaming division's headcount, signaling the company is willing to substantially scale back operations to stem losses. The broader 4,800-job figure suggests cost discipline extends beyond gaming into other underperforming areas.