Xbox Chief Executive Officer Asha Sharma informed employees in a separate memo that 1,600 positions would be eliminated immediately, with the remaining cuts scheduled through fiscal year 2027.
"History is full of companies that mistake longevity for inevitability," Sharma wrote, describing the current business as unhealthy with profit margins three to ten times lower than market rivals.
"We will not be one of them," she added.
The restructuring directly impacts several game development studios under the Xbox umbrella.
Compulsion Games and Double Fine Productions will transition to independent status, maintaining full ownership of their intellectual property and game catalogs.
Ninja Theory and Undead Labs have finalized terms to join new corporate owners, securing funding for active development projects.
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In France, Arkane management has initiated a mandatory consultation process with its works council to evaluate strategic options that could lead to a sale or closure.
