As widely anticipated by the rumors of recent weeks, today the CEO of XBOX Asha Sharma finally announced the huge and painful restructuring plan of XBOX, dominated however by a clarification: even if some studios will leave XBOX, none of the games announced so far will be canceled.

In what promises to be the most profound and impactful reorganization in the history of the brand, Asha announced the painful decision to reduce the workforce by about 3,200 units during the 2027 fiscal year, flanked by the simultaneous exit of four major development studios which, fortunately, will not close, but will pass under new management. A total reset dictated by the need to cope with a severe global crisis in the hardware market and overall commercial performance below initial expectations.

The decision to start this massive restructuring, which is expected to last one year, stems from the awareness that the current business model is not financially sound. XBOX operates with profit margins three to ten times lower than competing companies. The entry into the ninth generation of consoles took place starting from a smaller installed base and a decidedly high cost structure. To stimulate growth, the company had bet heavily on the expansion of XBOX Game Pass, a multiplatform strategy and an expansion of the content portfolio. While these moves generated significant value, they did not progress at the pace expected, leading to a weakening of the core business. The continuous increase in teams, investments and time in the hope of a better outcome has not paid off, and today's scenario sees the entire industry facing the most serious hardware crisis in its history, making a profound refoundation of operational strategies inevitable.

The first pillar of this zeroing plan focuses on the content portfolio and the management of development teams. Starting in 2018, the division has pursued an extremely aggressive acquisition policy, but in the meantime the global market has become saturated to such an extent that the number of games produced each month in the entire industry now exceeds the totality of the titles launched in the last ten years combined. This situation has forced XBOX to compete not only with the publishing giants, but also with a myriad of small independent studios. Management acknowledged that it is neither possible nor beneficial to own every successful company, revealing that in a typical year, the company recorded a loss of as much as 64 cents for every dollar invested in certain firms . With the new course, the focus will shift to supporting external creators, offering open development tools and access to a wide audience to help them realize their visions.

As a result, the separation from several major software houses has been made official. Compulsion Games and Double Fine Productions will return to being independent studios by regaining control of their management, their intellectual properties, historical catalogs and the funds necessary for the next games in the pipeline. Ninja Theory and Undead Labs have instead signed agreements to move under new ownership, while still receiving adequate funding to complete and support the growth of top-level projects such as Senua and State of Decay 3. On the European front, Arkane's French management will soon start the necessary consultations with the works council to evaluate possible strategic options for the future of the studio.

The cuts in the company's workforce, which will reach 3,200 by the end of the 2027 fiscal year, start immediately with the elimination of about 1,600 jobs today. The staff reductions will vary according to the departments and will involve the likes of Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and XBOX Game Studios themselves, with a simultaneous redistribution of resources to projects deemed to be of higher priority.

However, the management wanted to reassure the community by specifying that none of the video games or first-party projects already publicly announced will be canceled due to these cuts. At the same time, it is established that important studios such as Mojang and King will report directly to Asha Sharma from now on. Both companies are now considered as real platforms and represent the largest firms in terms of monthly active users, guaranteeing XBOX a fundamental geographical and demographic differentiation.

The second key point of the restructuring will touch on the simplification of management and internal organization. The management's belief is that great technologies get better when they become simpler and leaner, not when they get too big. In some areas of the company , there had been up to 14 hierarchical levels of managers, with teams 40% larger than at the beginning of the generation, despite the fact that the user base and the overall time users spend playing had declined. This excessive complexity has slowed down decision-making processes, confused responsibilities and made it more difficult to offer the best possible experience to us players. To solve the problem, the management levels will be drastically reduced to a maximum of five, and in many cases to three, favoring a horizontal organization built around operational developers, leaders strongly involved in fieldwork capable of growing their teams, and individual figures directly responsible for key results and decisions. The operational flow will be further optimized through a cleaning of the tools used, the adoption of shared services and a 50% cut in expenses for external suppliers.

Finally, the reorganization will aim to unhinge the internal fragmentation caused by the rapid growth of recent years, which saw teams and studios move too independently, hindering the sharing of common goals. For the first time in the company's history, the position of Chief Operating Officer is established with total responsibility for profits and losses in the content, hardware, platform and services sectors. The role has been entrusted to Helen Chiang, a historical figure who in her almost twenty years of career within XBOX has helped build pillars such as XBOX Live, as well as having led Mojang and the extraordinary success of the Minecraft franchise. Chiang will be tasked with unifying all activities under a single operating model, ensuring transparency in investment decisions and clear accountability for the bottom line.

All these restrictive measures, according to the management, are not aimed at reducing XBOX's presence on the market, but at projecting it towards a more solid, global and creative future. The investments for the current year will be the highest ever seen, but they will be allocated with a much greater discipline and clarity, putting them entirely at the service of the main objective: to make sure that the platform is the place of excellence where the whole world can play and give vent to its imagination.

The long-term perspective therefore remains to lead a company capable of entertaining over a billion people every day, returning to economic growth during 2027 thanks to incredibly talented teams and some of the most beloved franchises in entertainment history.

Asha concludes her letter with a reflection: history is full of great companies that have traded their longevity for an inevitable fate, and XBOX wants to prove that it is not one of them.