Microsoft CEO Satya Nadella has described the ongoing restructuring of the Xbox gaming division as “great to see”, despite the brand facing thousands of job losses and a significant decline in subscription numbers.
Speaking on the Sources Podcast with Alex Heath, Mr Nadella described the restructuring efforts led by Xbox CEO Asha Sharma as “great to see”. The Microsoft chief executive stated he feels “fantastic” about the brand’s current intellectual property (IP) portfolio and its corporate direction.
The positive assessment comes amid a period of severe contraction for Microsoft’s gaming workforce. The most recent round of cuts involved 268 staff, specifically affecting World’s Edge, the studio behind the Age of Empires series. These redundancies are part of a broader plan to eliminate 3,200 positions across the 2026 and 2027 fiscal years. Approximately 1,600 of those roles have already been cut.
A corporate ‘reset’
The job losses are part of what leadership calls a “reset” strategy. Under the guidance of Asha Sharma, the primary goal is to make the business sustainable.
Xbox is shifting its business model to act simultaneously as a major third-party publisher and a platform provider. This transition has already seen high-profile franchises such as Halo moved under the management of Activision following Microsoft’s multi-billion pound acquisition of the publisher.
Despite the acquisition of major titles, the Xbox Game Pass service appears to be struggling to maintain its momentum. Reported figures indicate that subscriber numbers have dipped to approximately 30 million in 2026, a notable decrease from the 34 million recorded in 2024.
Strategic shift
In an official update regarding the continuing reset of the business, Xbox leadership has emphasised the need for sustainability. This includes a move toward releasing more first-party titles on rival consoles like the PlayStation 5 and Nintendo Switch to maximise revenue from its software library.
The restructuring mentioned by Mr Nadella is intended to create a more lean organisation capable of weathering the current volatility in the global games market. However, for the hundreds of developers recently let go from studios like World’s Edge, the “fantastic” outlook described by corporate leadership stands in stark contrast to the reality of the industry’s shrinking job market.
The remaining 1,600 planned layoffs are expected to be carried out over the next 18 months as the company continues to consolidate its various studios and departments following the Activision Blizzard merger.
