Xbox chief executive Asha Sharma delivered devastating news to employees worldwide on the morning of July 6: 3,200 positions would disappear through fiscal 2027, with 1,600 cut immediately. The announcement, titled “Resetting Xbox,” marks the largest reorganization in Microsoft’s console division history.
The video game industry has weathered relentless layoffs over recent years, yet the scale of this restructuring stunned even veteran developers. Rumors had circulated for weeks following a Bloomberg report on June 10 that hinted at coming cuts. Still, many staff believed their studios remained insulated.
When Teams meeting invitations arrived an hour after Sharma’s email, workers found themselves locked out of responses. Cameras stayed off. Microphones remained muted. Studio managers read prepared statements, then informed employees their Slack access would vanish within minutes.
“All of our cameras and microphones were turned off so we weren’t able to state anything or react to anything,” recalls Anne Barrett, laid off from Bethesda Game Studios Austin. “You saw a flurry of goodbye messages before everything was just shut off.”
Morgan Goin, who worked at ZeniMax Online Studios, described watching colleagues exchange contact information frantically before silence descended. “All through the morning, everyone was sending their goodbyes.”
Both studios unionized in 2024, and union representatives now negotiate severance packages with Microsoft. Under the federal WARN Act, affected US employees receive pay through September 4. Rallies have broken out across North America outside studio offices.
Id Software, the studio behind Doom and Quake, lost 136 staff members, effectively gutting its workforce. One affected VFX artist, Derek Best, claimed the developer had been reduced to “support studio size” in a LinkedIn post.
Workers describe the emotional toll in stark terms. Goin admits struggling with sleep, eating, and basic self-care. “We’re doing the depression symptoms, that’s what’s happening. I feel like I’m grieving.”
Simon Préfontaine, a single father laid off from Bethesda Game Studios Montreal, echoes that sentiment. “I do feel like I went through the stages of grief. You work with these people for years and years and years, and then suddenly you don’t get to see them any more.”
The selection criteria baffled remaining employees. Alex Nguyen, still employed at Bethesda Games Studios Dallas, watched two veteran character artists with decades of experience get dismissed. “It never made any sense.”
Perhaps most concerning: the institutional knowledge now lost. Barrett questions how studios can maintain quality standards without the people who built proprietary technology and defined visual identities. “You can’t just throw new people at that problem.”
Negotiations between unions and Microsoft continue, with the company offering up to 39 weeks of severance, six months of paid COBRA coverage, and outplacement support. Meanwhile, 1,600 additional job cuts loom as the division’s reset unfolds.
