Xbox CEO Asha Sharma announced roughly 3,200 job cuts across Microsoft Gaming over the next fiscal year and a half, with about 1,600 employees laid off immediately and another 1,600 to follow through mid-2027. Four studios will be moving to different management as part of the restructuring. In a statement, Sharma called it "the most significant restructure in Xbox history" Asha Sharma.

The studio hit hardest appears to be id Software, the legendary developer behind Doom. Reports suggest roughly half of id's workforce was cut, with the majority of its programming team eliminated Eurogamer. The timing is striking: these layoffs happened the same week id released new downloadable content for Doom: The Dark Ages. A union representing staff at Bethesda Game Studios and ZeniMax said both organizations were "hit hard" by the restructuring, while describing id Software as surviving but being "cut deeply" PC Gamer.

Sharma took over as Xbox head in February 2026 after a leadership shuffle that saw Phil Spencer, the longtime head of Microsoft Gaming, step down. Sarah Bond also left her role as Xbox president during the same reshuffle IGN. Matt Booty was promoted within the division as part of that transition IGN.

The layoffs will unfold in two waves rather than all at once. Sharma described the four departing studios as moving "to new management" rather than being shut down, which typically means they are being sold off or spun out to separate companies rather than closed. That distinction matters significantly to the employees involved and to whoever might acquire those studios.

The id Software situation stands out for a specific reason. This is a studio built on small teams of highly skilled engineers — the kind of place where losing half your programmers means losing core capabilities, not just cutting a percentage of headcount. When a studio releases game content at the same moment it loses much of the team that would normally maintain and improve that content, it raises practical questions: who will fix bugs, add features, and keep the game running smoothly going forward. Neither Microsoft nor Bethesda has publicly addressed how that work will get done.

The union's characterization is worth noting for the specificity it offers. By explicitly distinguishing between Bethesda Game Studios and ZeniMax (described as hit hard) and id Software (described as surviving but deeply cut), the union provides one of the few independent assessments of how unevenly these cuts landed across different studios. A corporate statement would likely smooth over such details, but a labor organization usually speaks to the lived experience on the ground.

Microsoft has seen plenty of leadership changes and restructuring over the years, but the speed here is notable. Five months separated the CEO transition in February from Sharma's announcement of what she calls the division's biggest shake-up in history. Whether Sharma came in with this plan already written, or whether she developed it after taking the helm, is not yet clear from public statements. Microsoft has not explained its reasoning beyond Sharma's own framing.

The real question is not the total job count, but what happens to those four studios moving to new ownership. Headcount numbers get reported and largely fade from memory. Which studios survive, where they land, and who runs them determines which game franchises and teams stay intact versus which get scattered or wound down. Anyone watching the gaming industry over the past couple of decades will recognize this pattern: the org chart is the least important thing. The people, the code, and the pipelines are what matter.

The immediate operational puzzle is continuity for live games, particularly Doom: The Dark Ages. With a majority of id's programming team gone, maintaining new content and fixing bugs becomes a logistics problem with no obvious solution stated publicly. Microsoft has not addressed its plans for post-launch support for that game in light of the cuts.