At least the consoles are transparent.
Microsoft is planning yet another round of major layoffs within its Xbox division, according to a new report from Bloomberg, which cites people familiar with the company’s strategy.
While not officially confirmed by the company, and with no comment, the report suggests that the layoffs are expected following Microsoft’s current fiscal year, which closes on June 30. It’s also suggested that marketing budgets and other key spendings at Xbox are set to be slashed in the new FY.
This comes on the tail of an internal memo from new Xbox CEO, Asha Sharma, and head of Xbox, Matt Booty, which paints a rather scathing assessment of the company’s recent performance and certainly carries the aura of the threat of layoffs, without putting it in so many words.
Titled “Next 100 Days: XBOX Reset,” the message begins with some amount of optimism before admitting that the brand will “end this fiscal year at about a 3% accountability margin, down year-over-year,” and that (excluding the nearly-$70 billion USD acquisition of Activision Blizzard King) over five years it has spent over $20 billion on ongoing investments, while annual revenue has declined nearly half a billion during that time.
Sharma and Booty also address the ongoing hardware component crisis, which it projects will see the prices paid for console storage components reach more than five times what they were only two years prior. “While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade,” the memo reads. “We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.”
The pair go on to describe Xbox as being over extended across its business interests, after spending time and money to expand its studio system before delivering a steady pipeline of content, admitting that it has not capitalised on the huge potential of its own franchises.
The memo has since been published on the Xbox news portal and can be read in full there.
During last week’s big June 2026 Xbox Games Showcase, Sharma revealed the news that two of its flagship releases, Gears of War: E-Day and Clockwork Revolution, would be Xbox console exclusives. This is in spite of a shift toward multiplatform releases that was happening prior to Sharma’s appointment, one that had allegedly already solidified a PS5 release for Gears which was pulled at the last minute in favour of a more selective approach to exclusives.
The change was so last-minute, in fact, that retailers were reportedly already preparing to open pre-orders PS5 version of Gears of War: E-Day, and a PS5 logo appeared underneath the game’s key art in an episode of the official Xbox podcast, before the entire episode was pulled from associated channels.
While the extent of these impeding layoffs remains to be seen, it’s clear that Xbox is in a period of internal tumult, despite its efforts to exclaim the opposite, outwardly. A lavish and expensive Summer Game Fest-adjacent presence that, among well-catered mixers and huge theatre activations, included hundreds of free transparent Xbox consoles, painted a very different picture over the weekend to the stark reality of this most recent news. As the company continues to court fans with one hand, it signs off redundancies with the other.