Xbox CEO Asha Sharma rules out unit sale following 3,200 planned job cuts and studio shifts

Rejection of divestment plans

Xbox chief executive Asha Sharma dismissed reports that Microsoft plans to sell or spin off its gaming division in an interview with The New York Times. The public statement follows reports that Microsoft chief executive Satya Nadella and chief financial officer Amy Hood evaluated spinning out Xbox earlier in 2026. Nadella and Hood have since backed Sharma's overhaul plan, with Nadella noting on a podcast that he expects the division to return to growth in the next fiscal year. Sharma took over Xbox leadership in February 2026 with no prior video game industry background, having previously served as president of product in CoreAI and chief operating officer at Instacart.

Xbox is not for sale.

We will do whatever it takes to set the company up for success, and we will look at the right partnerships, the right operating model and everything needed to achieve that.

Deep workforce and studio restructuring

The division is executing a restructuring plan that involves cutting up to 3,200 jobs over the 2027 fiscal year ending in June 2027. About 1,900 of those layoffs have already occurred, alongside the divestment of five studios and the shutdown of Ninja Theory. Summer staff reductions eliminated roughly 20% of total Xbox personnel after Sharma stated in a July employee memo that the business was not healthy. In late September 2026, Xbox eliminated nearly 270 additional roles, hitting the internal development team behind Halo and reducing staffing at id Software. Microsoft transferred the Halo franchise, along with the teams responsible for Sea of Thieves and Age of Empires, under the management of Activision. Xbox game studios head Matt Booty and Sharma stated that the reduction of middle management aims to simplify production lines.

Financial targets and studio investments

Xbox generates roughly 6% of Microsoft total profits, placing the unit under pressure from corporate leadership to deliver returns following corporate investments into artificial intelligence infrastructure. Microsoft expanded the gaming arm through multi-billion-dollar acquisitions, including the $7.5 billion purchase of ZeniMax and the $75 billion acquisition of Activision. Nadella stated that the division must generate revenue independently rather than relying on ongoing parent company funding. The gaming unit maintains 500 million monthly active players across all services. The subscription platform Xbox Game Pass previously reached a peak of 34 million subscribers before memberships began dropping.

Strategic partnerships and platform features

Xbox secured a development agreement for the stealth title Physint with creator Hideo Kojima after Sony concluded its partnership with the developer. People familiar with the arrangement stated that the contract was completed substantially below the typical cost of developing premium releases and secures film and television adaptation rights. On the hardware and software side, Xbox deployed a physical disc-to-digital conversion feature globally to all console owners after concluding testing with Xbox Insider participants. The system unlocks digital licenses for physical disc owners on console, PC, and handheld devices for compatible Xbox Play Anywhere games, though original Xbox and Xbox 360 discs remain excluded from compatibility.

We've got a long way to go with Microsoft, and we're going to take the long-term view.