Xbox Plans Three More Layoff Rounds Before Helix

Xbox CEO Asha Sharma is planning three more layoff rounds in October, November, and January, against a 3,200-job cut she set in July. The division has already cut 1,868 jobs. The leftover waves land as Microsoft pulls Project Helix forward and internally prices the 2028 console between $1,200 and $1,800.

The job plan and the hardware plan are now running on the same clock, and on a thinner staff.

Xbox Is 1,868 Jobs Into a 3,200 Cut

Sharma’s July 6 memo told staff the company would reduce the team by about 3,200 through fiscal 2027, including about 1,600 role cuts that day, and that four studios would leave Xbox. A person familiar with the changes said the full year would equal 20% of the workforce. Microsoft’s company-wide round that Monday was about 4,800 jobs, and Xbox accounted for 1,600 of them, including people who left through studio spinouts.

On September 22, Xbox chief content officer Matt Booty told staff the company was eliminating 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management layer. Added to July, that is 1,868 jobs gone. Booty, counting the studio divestitures with those cuts, said the actions had brought Xbox roughly three-quarters of the way through the restructuring she had already announced.

THE 3,200-JOB CALENDAR

People familiar with the plans described those three extra rounds to a Fortune profile of Sharma published October 20, and they said the timetable can still move. Microsoft has not confirmed the dates or said how many people each wave would hit. The same account said the cuts have landed especially hard on company veterans, which strips out the people who remember how earlier Xbox hardware actually shipped.

October, November, and January Are on the Calendar

If the October round holds, it is the second cut in two months, after September’s 268. Booty’s note had already pointed staff to an October 6 all-Xbox town hall to talk about progress and the game lineup. The Fortune sources did not name teams for the next waves.

Members of The Coalition’s development team, which just shipped Gears of War: E-Day, have said they worry the next cuts will land now that the game is out, and that the timing could hit promised bonuses. That fear is specific, and it is the sort of thing a staggered calendar produces: ship the game, then wait to see if the studio is next.

Sharma took the job in February 2026 after Phil Spencer left, ending a 12-year run over Xbox and 38 years at Microsoft. She called the July action the most significant restructure in Xbox history and said a year-long reset could not be done in a single day. October, November, and January are how that year is being broken into payroll events.

Activision Takes Halo, Rare, and World’s Edge

The September memo was not only a headcount note. It moved the remaining franchise weight toward the publishers Microsoft already paid for.

WHERE THE FRANCHISES WENT

• Halo: Activision will build the next game with a new purpose-built team, kept apart from Call of Duty. A small team at Halo Studios stays on community support and games already in market.
• Rare and World’s Edge: Sea of Thieves and Age of Empires now sit inside Activision’s remit.
• Obsidian: Bethesda takes the studio on. Grounded continues, and Obsidian will work with Bethesda Game Studios on a new Fallout project.
• Playground and Turn 10: The two Forza teams become one studio, also on Fable.
• King: Microsoft Casual Games moves under King.
• Mojang and King: Both already report directly to Sharma, named in July as the largest studios by monthly active players.

Activision president Rob Kostich said the goal for Halo was to make the greatest Halo game ever, and that a purpose-built team was already being assembled. Halo Studios, once 343 Industries, is left as a support shop after Campaign Evolved. Microsoft also cut id Software deep enough that the Doom studio is unlikely to attempt another game on the scale of Doom: The Dark Ages.

Arkane Lyon Has Until November 13

The studios Sharma tried to sell are not in the same place. In August, Compulsion Games and Double Fine went back to independent management with their IP, catalogs, and runway money. Booty said Undead Labs has now completed a similar split and will release State of Decay 3 day one on Game Pass with a new publisher.

Ninja Theory did not get that landing. Booty wrote that two separate agreements fell through, and that Xbox would begin consultation on a proposed closure while still looking for other paths. Arkane, under French labor rules, was already in a works-council process that Booty said would run through the end of the year.

WHAT WE KNOW

• The deadline: Union accounts put November 13 as the end of consultations with Arkane’s Social and Economic Committee, with about 217 jobs at risk.
• The game: Marvel’s Blade is described as near the end of production. A union representative called it a monumental waste if it went unreleased.
• Microsoft’s line: The company said it is actively seeking a partner to support the next phase of development and commercialize the project, and that it keeps the committee and staff informed.

WHAT IS UNCONFIRMED

• A buyer: Several forms of takeover are under discussion. None has been announced.
• Ninja Theory’s end state: Closure talks have started. Booty still said other paths are being explored.

A near-finished Blade sitting in Lyon while Microsoft shops the studio is the same bind as Ninja Theory showing work and then entering closure talks. The games are not the cost center being protected. The headcount is.

The Game Pass Bet Did Not Grow Fast Enough

Sharma did not hide the diagnosis. The July memo is still the document the later rounds are executing.

Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.

Asha Sharma, Xbox CEO, July 6 staff memo

She wrote that since 2018 Xbox had expanded its studio list while the industry’s monthly output outpaced the prior ten years combined, and that in a typical year the company lost 64 cents for every dollar it invested in that model. It is neither possible nor desirable, she wrote, to own every independent studio. That is the written case for spinning out Double Fine and Compulsion, and for walking away from Ninja Theory and Arkane when buyers failed.

The same memo said work in some parts of Xbox passed through as many as 14 management layers, and that platform teams were 40% larger than at the start of this generation even as the player base and playtime fell. She ordered layers down to no more than five, and to three where possible, cut vendor spend in half, and named Helen Chiang, a nearly two-decade Xbox veteran, as the first chief operating officer with end-to-end P&L across content, hardware, platform, and services. She also said Xbox would invest as much this year as it ever has, only with a tighter focus, and that the company would return to growth in 2027.

The Game Pass bet that missed its pace is the same strategy she is now unpicking. People briefed on the current plan say Game Pass will move toward a tiered a la carte setup, with add-ons for console-only games, cloud gaming, and multiplayer, instead of one bundle that includes all three whether a subscriber uses them or not.

Helix Is Being Pulled Forward on a Thinner Staff

The leftover cuts would be a cleanup if the hardware calendar were slipping. It is not. People familiar with the strategy said Microsoft has pressed the hardware team to move Project Helix timelines up by at least several months, including by using AI tools where they fit, and that Sharma has been in Building 87 with the design group on prototypes.

In March she told staff Helix would lead in performance and play your Xbox and PC games. The October profile put dates on the family of devices she has described: a next-generation handheld by the 2027 holiday season, then the home console in the 2028 holidays. Internally, the Helix box has been projected to cost consumers between $1,200 and $1,800 unless Microsoft subsidizes it.

THE PRICE STACK

• Helix, internal: $1,200 to $1,800 to the buyer, unless Microsoft eats part of the bill.
• Series X, current: The Xbox Series X now starts at $750.
• Handheld target: Holiday 2027, with Xbox now largely steering the OS after a fight with Windows.

Windows leaders wanted the handheld on a trimmed-down Windows Home build, in the mold of the ROG Xbox Ally. Sharma’s group wanted its own software for gaming performance. Tensions ran high enough that a senior Xbox executive threatened to scrap the handheld rather than take the Windows build, according to people briefed on the clash. Xbox now largely controls the OS direction. Sharma still told Fortune the groups collaborate, saying, “We can’t build Helix on our own.”

On October 20, the same day that profile landed, Xbox VP of next generation Jason Ronald was on X announcing FSR 4.1 for Series X|S and the Ally family, and calling it the foundation for FSR Diamond and Project Helix.

We are excited to share that AMD FSR 4.1 will be available to developers on XBOX Series X|S very soon.

We have partnered closely with our friends @AMD to optimize and tune the models to deliver incredible performance and quality on both consoles and the ROG XBOX Ally and Ally X.… pic.twitter.com/kfFokYspuY

— Jason Ronald (@jronald) October 20, 2026

The public argument about that Fortune package has been the price. Replies fixate on a console that used to cost $300. The sharper problem is the overlap: a 2028 machine at the top of that $1,200 to $1,800 range, a 2027 handheld that almost died in an OS fight, deadlines pulled forward, and three more staff rounds before January on a team already down 1,868 people. A 2028 box that arrives after the people who would have shipped it are gone is not a separate rumor. It is what this calendar does.

Althoff Says They Would Not Staff a Sale

Several current and former staff members have told interviewers they believe Sharma was put in to make the painful cuts before a sale or spin-off, a reading fed by smaller tells such as staff mail moving off microsoft.com and the division dropping the Microsoft Gaming name. Judson Althoff, CEO of Microsoft’s commercial business, pushed that down.

Asha is one of the best leaders we have at the whole company. We would not have put her on a business we intend to sell. There’s going to be a ton of speculation about all this. Time will tell.

Judson Althoff, CEO, Microsoft commercial business

Sharma has said the same in plainer words: “Xbox is not for sale.” She added that the company will look at the right partnerships and the right operating model to set Xbox up. The July memo closed on a harder line. History, she wrote, is full of companies that mistake longevity for inevitability, and Xbox will not be one of them.

Keeping the division and emptying it are both compatible with that sentence. Chiang now holds the combined P&L. Activision holds Halo, Rare, and Age of Empires. Bethesda holds Obsidian. The independent studios that could leave, left. Ninja Theory is in closure talks. Arkane Lyon has until November 13. Helix is still a 2027 handheld and a 2028 console on a staff that is not done shrinking.

Microsoft has not said who the October round hits, or whether it has already started. The January round is still on the calendar. So is November 13 in Lyon. So is a Helix box internally priced between $1,200 and $1,800, on whatever headcount is left when those dates arrive.