Xbox plans major layoffs in July 2026 as revenue and console sales decline

Microsoft's Xbox is planning significant layoffs for July 2026, targeting marketing and other budget lines as the gaming platform struggles with declining console sales, falling revenue and a lack of major releases.

Bloomberg reported the planned cuts, noting they would represent the first major restructuring under Xbox Chief Executive Officer Asha Sharma, who took charge of the gaming unit in February.

A platform under financial pressure

The decision follows years of mounting difficulties for Xbox, during which Microsoft's push into subscriptions and cloud gaming failed to compensate for weakening hardware performance and a shortage of blockbuster titles.

In an internal email to staff, cited by Bloomberg, Sharma disclosed that Xbox's accountability margin had fallen to just 3 per cent. She also revealed the platform had spent more than $20 billion on content, platforms and hardware subsidies over the past five years, even as annual revenue declined by nearly half a billion dollars over the same period.

Rebuilding from the ground up

Sharma made clear in her message to employees that significant changes lie ahead. She said Xbox would need to rebuild its platform infrastructure and rethink its portfolio in the weeks and months to come, the report noted.

The precise number of roles to be affected has not yet been confirmed. The layoffs are expected to follow shortly after the close of Microsoft's fiscal year on 30 June.

Early strategic shifts under new leadership

Sharma has already moved to reposition the platform since taking the role. In April, Xbox lowered the price of its Game Pass subscription service and ended the practice of releasing future Call of Duty titles on day one through the platform — two of the most significant strategy changes made under her leadership so far.