Microsoft's Xbox division plans major layoffs next month, with marketing and budget cuts. The restructuring follows declining console sales and a shortage of blockbuster titles, as new CEO Asha Sharma seeks to rebuild the unit.
Microsoft's Xbox division is planning major layoffs next month, along with significant cuts to marketing and other budgets, Bloomberg News reported Wednesday. The job cuts would be the first major restructuring under Asha Sharma, who took over as CEO of the gaming unit in February.
Microsoft did not immediately respond to a request for comment. Xbox has faced mounting pressure as the company's bet on subscriptions and cloud gaming failed to offset declining console sales and a shortage of blockbuster titles.
Sharma said Xbox's accountability margin had fallen to 3% and that the company had spent more than $20 billion on content, platforms and hardware subsidies over the past five years, even as annual revenue declined by nearly half a billion dollars during that period, Bloomberg reported, citing an internal email to employees. She said Xbox would need to rebuild its platform infrastructure and rethink its portfolio in the weeks and months to come, the report said.
The exact scale of the layoffs is not yet clear. They are expected shortly after the close of Microsoft's fiscal year on June 30, according to the report.
In April, Microsoft lowered prices for its Game Pass service and ended day-one releases of future "Call of Duty" titles on the platform, marking one of the first major strategy changes under Sharma.
The restructuring underscores the challenges Microsoft faces in its gaming business, which has long been a key growth driver for the company. The Xbox division has struggled to maintain momentum as the console market matures and competition from Sony and Nintendo intensifies.
Microsoft's stock fell 1.5% to $397.36 on Wednesday, reflecting broader market concerns about the company's near-term outlook. The stock carries an Alpha Score of 58 out of 100, indicating moderate sentiment among traders and analysts.
The layoffs come as Microsoft continues to invest heavily in cloud infrastructure and artificial intelligence, areas that have driven much of the company's recent growth. The gaming division's struggles highlight the uneven performance across Microsoft's business segments.
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