Microsoft's Xbox division is undergoing its most extensive restructuring, eliminating 3,200 positions and separating four game studios from corporate ownership. The cuts will roll out in stages, with roughly half effective immediately and the remainder distributed over the following year. Compulsion Games and Double Fine Productions will be spun out to operate independently, while Ninja Theory and Undead Labs have secured outside investment and new management arrangements.

CEO Asha Sharma attributed the overhaul to business pressures including weakened profit margins, slower-than-expected growth, and an unprecedented hardware crisis affecting the broader gaming industry. She also cited organisational inefficiency, noting that decision-making passes through 14 management levels, and pledged to reduce that to a maximum of five. Despite the restructuring's scale, leadership committed to maintaining investment levels while improving operational focus and accountability.