Nadella Praises Xbox Streamlining As Layoffs Continue
Microsoft CEO Satya Nadella addressed Xbox's layoffs by calling the team streamlining a positive step and saying he feels confident about the company's IP and studios. New CEO Asha Sharma announced 3,200 cuts across fiscal 2026 and 2027, with nearly 2,000 employees already affected. Reports from current and former staff describe internal conditions as chaotic, with goals they call unrealistic.
New CEO Asha Sharma announced 3,200 planned reductions across fiscal 2026 and 2027, with nearly 2,000 already carried out. The cuts include studio closures and severed partnerships. CEO Satya Nadella, speaking on the Sources Podcast, characterized the restructuring as beneficial streamlining and expressed confidence in Microsoft's game properties and production teams.
Internal accounts gathered by Aftermath complicate that upbeat framing. Current and former workers reportedly call conditions chaotic, cite aggressive targets they view as unrealistic even before the cuts, and blame management. id Software employees allegedly say leadership's main message has been demands for faster, higher profits. Obsidian Entertainment reportedly lost a quarter of its staff before being assigned a new Fallout title under Bethesda.
The layoffs could deepen job insecurity across game development, affecting not only the nearly 2,000 workers already cut but also remaining staff at Xbox-owned studios. With studios closed and teams pressured toward higher profits, morale and creative risk-taking may suffer, potentially slowing or reshaping future releases. Players could see fewer experimental titles or delays, while the wider industry may face further consolidation and reduced trust in corporate messaging about stability.