// KOTAKU — GAMING
The Internet Reacts To Xbox’s Layoff-Filled ‘Reset’ With Relief And Rage: ‘Another Stream Of Tone Deaf Excuses’
And there it is. Early this morning, an email was sent out to Xbox employees outlining the company’s plan for a massive reorganization that CEO Asha Sharma called “the most significant restructure in Xbox history.” In addition to bone-cutting layoffs, the move will see Compulsion Games and Double Fine spun off to become independent studios. Meanwhile, Ninja Theory and Undead Labs will part with the company to come under new ownership with a bunch of cash to keep development going on their respective in-development games, Senua and State of Decay 3.
“Our business is not healthy,” Sharma wrote, as she outlined how Xbox has overspent and underdelivered. “As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome.” There’s something massively disheartening in finally hearing what has been known for several years now. It’s the worst kind of “I told you so,” because it was all so avoidable. An Xbox more focused on sustainability and longevity over “number go up forever and ever” would not have bought Activision Blizzard for $70 billion or disincentivized players from buying their biggest, most expensive-to-develop games by sticking them on Game Pass. But what does it say about the gaming community’s collective trauma over the last five abysmal years that the reactions to Xbox spinning off several of its studios while laying off 3,200 souls include a grim and resigned relief?
Big cuts, but Xbox has managed to avoid closing any studios today. Double Fine and Compulsion go indie. Ninja Theory and Undead Labs will have new owners. Arkane Lyon process starts today. CEO Asha Sharma wants Xbox to reach 1bn players a day (it currently hits 1bn a year).
— Christopher Dring (@dringo.bsky.social) 2026-07-06T13:35:07.400Z
While I am sad for those laid off (especially in this horrid economy) there is at least one silver lining.
All of those studios we feared closing are going to be fine. 2 are now independent, 2 are sold off and Arkane is in negotiations.
Not the bloodbath we all feared. https://t.co/WWIgABYkn5
Microsoft engineered this so that it looked the least bad optically while at the same time still committing a slaughter, all so that Satya Nadella can still dick around with more useless AI horseshit. Fuck him and fuck Microsoft.
— Chris Person (@papapishu.bsky.social) 2026-07-06T14:31:45.888Z
This is now the FIFTH major round of layoffs at Xbox since the company spent almost $70B on Activision Blizzard in 2023.