XBOX July 2026 Layoffs & Everything You Need to Know: Asha Sharma Email, Games and Studios Affected

More XBOX layoffs had been rumored, and the reports were confirmed in early July 2026, when Asha Sharma announced the ‘difficult decision’ to pretty much hit the reset button for XBOX. We’re running through everything you need to know.

On July 7, 2026, XBOX CEO opened up on XBOX’s ‘Big Reset,’ which saw massive layoffs.

The wholesale changes had massive implications across the whole company, and everything was affected: Games in development, several key studios, and, of course, the people at the heart of everything.

How Many People Have Been Affected by XBOX July 2026 Layoffs?

Asha Sharma’s official statement revealed that ‘Approximately 3,200’ people are set to lose their jobs over the next year, with 1,600 happening on the day of the company email.

It feels like every week we’re talking about more layoffs, and this is another in a long line of an ever-growing list. Reports of new XBOX layoffs actually appeared weeks in advance.

The news sadly came to fruition on July 7, and Asha Sharma talked about this in her official email/memo:

‘I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today.’

We wish everyone who’s been affected well.

Why Has XBOX Had More Layoffs in July 2026?

Several reasons have been attributed to the July 2026 layoffs, including disappointments with XBOX Game Pass, owning too many studios, and heavy investment not yielding desirable returns.

It was quite a damning statement to hear XBOX’s CEO describe XBOX’s business as “Not Healthy.”

Sharma explained how ‘the company has lost 64 cents for every dollar that was invested,’ and that XBOX is ‘operating at margins that are 3–10x lower than comparable platform and publishing businesses.’

Furthermore, XBOX Game Pass didn’t ‘Grow At The Pace’ Microsoft had planned.

The XBOX Game Pass journey over the last couple of years has been a rollercoaster, to say the least. We all remember Microsoft trying to defend the XBOX Game Pass price increase in 2025.

Well, the price increase was reversed earlier this year, with one of Asha Sharma’s first major decisions being to announce an immediate Game Pass price drop. Throughout all of this, though, XBOX has deemed Game Pass to have not grown fast enough.

I also mentioned XBOX believing it owned too many studios, which is why four studios will no longer be under the XBOX banner—more on this below.

All Studios Affected Due to XBOX July 2026 Restructuring

Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs are the four studios that XBOX has sold off, but have made sure to strike a deal so that they can all keep running.

So, the good news is that none of them has been permanently closed.

Sharma explained:

‘Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3.’

To summarise:

The future isn’t as clear for Arkane following the split, and the team is undergoing ‘consultation with its Works Council to review potential strategic options.’

Obviously, these teams had various games in development that you’re no doubt eager to learn about.

Have Any Games Been Canceled Because of XBOX July 2026 Changes?

Officially, none of the games associated with these teams have been canceled, that we know of, but this could all be subject to change.

Sharma made sure to use the words ‘publicly announced‘ when talking about games and cancelations.

This is what she said in her memo:

‘None of our first party publicly announced games or projects are being cancelled as part of these reductions.’

This means, at the time of writing, none of these games has officially been canceled:

But the big worry is Blade, whose future hangs in the balance along with Arkane.

To fill some of these voids, XBOX is ‘Shifting Investment’ to focus on Activision, Bethesda, Blizzard, and others instead.

Asha Sharma Email to Employees

I’ve brought you snippets of Asha’s full email, which she sent to all XBOX employees on July 7, 2026, but the full thing is very long and very open and honest about the company.

Please check out Asha Sharma’s full memo on the Xbox Layoffs and changes.

Let us know what you think about the XBOX layoffs in general down in the comments, and join the official Insider Gaming Discord server.

For more articles from Insider Gaming, read about Meccha Chameleon becoming 2026’s best-selling game. Don’t forget to sign up for our weekly newsletter.