Xbox lays off 3,200 employees while aiming for a billion daily users by 2026

On July 7, 2026, Xbox CEO Asha Sharma announced a significant restructuring that will see Microsoft lay off 3,200 employees across its gaming division. Despite these cuts, Sharma expressed an ambitious goal for Xbox to entertain over a billion people daily, a target that appears increasingly unattainable amid industry challenges.

Microsoft's Major Layoffs Impact Xbox

In a move described as the "most significant restructure in Xbox history," Microsoft will cut 1,600 jobs this summer, with another 1,600 layoffs expected within the next year. These layoffs are part of a broader overhaul at Microsoft, which has faced significant losses in its gaming sector.

Sharma stated, "In a typical year, we lost 64 cents for every dollar we invested," highlighting the dire financial state of Xbox. As part of this restructuring, four internal studios—Double Fine, Compulsion Games, Undead Labs, and Ninja Theory—are being spun out as independent developers, a decision that may reflect a shift in strategy for Microsoft.

Aiming for a Billion Daily Users

Sharma's statement about reaching a billion daily users raises eyebrows, especially given the current challenges facing the gaming industry. The strategy seems focused on major franchises like Halo, Gears of War, Minecraft, and Candy Crush, potentially sidelining smaller, innovative projects.

Helen Chiang, previously overseeing the Minecraft franchise, has been appointed as Xbox's chief operating officer, a role aimed at consolidating Xbox's business under a unified model. Sharma emphasized that this restructuring is about creating a "bigger future for Xbox," even as the team shrinks.

Confusion in Xbox's Strategy

Despite the focus on blockbuster games, the rationale behind further cuts at studios like Bethesda and Obsidian is unclear. These studios are known for successful franchises such as Fallout, Elder Scrolls, and Avowed, and their potential for growth seems at odds with the layoffs.

As the gaming industry grapples with volatility, Sharma's billion-user goal appears increasingly unrealistic. With Xbox's current trajectory, the challenge is not just in reaching that number, but in maintaining a viable business model amid ongoing restructuring.