Microsoft's gaming division is heading toward another massive wave of layoffs, and unionized workers are scrambling to secure protections before the cuts land at the end of the company's fiscal year on June 30.
The Communications Workers of America, which represents more than 3,500 Xbox staff across multiple unionized shops since 2022, has called for immediate bargaining to shield employees from what industry insiders expect will be devastating job losses and studio closures. Bloomberg's reporting characterizes the coming cuts as a "bloodbath" that will leave developers "punished" simply for executing corporate strategy.
Newly-installed Xbox CEO Asha Sharma has signaled the pain is coming, warning that the console maker's profit margins are unsustainable. Multiple studios now face shutdown, including Compulsion Games (South of Midnight), Double Fine (Kiln and Keeper), and Ninja Theory (Hellblade). The situation has grown more bitter following reports that Microsoft announced Ninja Theory's next game, Senua, at its recent Games Showcase while already planning to shut the studio down, allegedly to boost investor enthusiasm before the axe fell. Industry observers now worry the game may never release.
This potential second wave would land just 12 months after Microsoft fired 9,000 gaming staff in July 2025, a cuts that shuttered studios like The Initiative and canceled titles including Rare's Everwild. Remaining workers are understandably on edge.
The union's leverage, however, remains unclear. Xbox controls a sprawling empire spanning first-party franchises like Halo, Gears of War, and Forza Horizon, plus acquired powerhouses Bethesda (The Elder Scrolls, Fallout), Activision Blizzard (Call of Duty, Diablo, World of Warcraft), and mobile juggernauts Candy Crush and Minecraft. That scale gives the company enormous flexibility to absorb change.
Sharma appears determined to extract value from that portfolio. Reports indicate she is accelerating development timelines for new Elder Scrolls, Fallout, and Halo titles as part of a broader reset. More provocatively, Microsoft has not ruled out converting Xbox into a wholly-owned subsidiary, operating it as a joint venture with external partners, or even putting it up for sale. The Information first reported these possibilities, citing three sources with knowledge of internal deliberations.
Author Emily Chen: "The union's timing is smart, but Microsoft has shown it will cut aggressively and move fast, leaving workers with limited real protection once the decision is made."
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