Occurring concurrently with the 2026 Summer Game Fest announcements and previews this past June was the annual Xbox Games Showcase. Returning to an in-person event compared to last year’s shift to a digital presentation, Microsoft unveiled sneak peeks at returning fan-favorite Xbox franchises like Gears of War, Halo, Fable, and more. But more than the flashy announcements and trailers, Xbox was candid regarding its shaky track record in recent years, hemorrhaging millions of Xbox Game Pass subscribers over the past several months due to its questionable business decisions. This admission of mismanagement and the lowering of Xbox Game Pass’ subscription prices seemed like the company was working to win back fans’ trust.

And then July saw a much more painful direction for the company’s strategy.

On July 6, an internal memo sent out by new Xbox CEO and executive vice president Asha Sharma announced that the company was eliminating 3,200 positions by the end of the 2027 fiscal year. Furthermore, 1,600 of those roles would be eliminated that day in what Sharma termed a significant reset for the Xbox brand in the face of diminishing returns for the viability of Xbox Game Pass and the commercial performance of the Xbox Series X|S overall. Entire studios were shut down or sold off to accommodate this massive downturn in staff numbers, including beloved studios like Double Fine and Ninja Theory.

In the face of thousands of game developers, including some who had worked at Xbox for years on its biggest titles, Xbox has publicly tried to maintain a brave and bold face that it was righting the ship. In the same memo announcing the layoffs, Sharma declared that she envisioned a future for Xbox that would one day engage one billion active users daily worldwide. Yes, you read that last sentence correctly. One billion active users. Billion with a B. Daily.

In case my pedantic commentary didn’t make it clear in that last paragraph, not only is that a delusional goal to declare with your whole chest but to have that statement close out an announcement of mass layoffs feels laughably out of touch with any sort of business reality.

To put things into perspective, Steam, the largest digital PC gaming platform in the world, only clocks in over 32 million active users concurrently. To put common sense into perspective, Sharma’s goal of getting one billion active users across the Xbox brand daily would mean that approximately 12.5% of the world’s entire population would be engaging with Xbox platforms and titles daily. I love Halo and Fallout as much as the next guy but I don’t play them daily and I don’t think that tens of millions, let alone hundreds of millions, are looking to boot up their Xbox every day.

Also, speaking of common sense, to tell a workforce of thousands that you’re going to grow a brand to untold levels of active users without them just feels a corporate Kool-Aid induced slap in the face. That this move also came on the heels of a fancy showcase, complete with limited edition Xbox Series X consoles to celebrate the 25th anniversary of the original Xbox, feels disingenuous to how the company presented the brand during its showcase. Xbox knew that it was about to cut back big time on its staff and studios in the midst of throwing a lavish gala in Los Angeles, wining and dining press and influencers as it planned its extensive internal purge.

For a company trying to win back the good faith of its lapsed fans, Xbox eliminating thousands of jobs from its biggest projects and studios in such an overnight process is completely counterintuitive towards that goal. Savvy gamers and journalists have already caught on to the bait-and-switch tactics, from the celebration of Xbox less than a month before its mass layoff announcement signaling the future for Xbox wasn’t as bright as it seemed back in June. That sort of thing sticks in the memory, no matter how cool a $70 game may look with a slickly produced trailer.

To top this all off, in the ironic dystopia that is 2026, Sharma was recently named to serve on the Federal Reserve’s Productivity and Jobs Task Force. There is something darkly funny about that development, but I’m not particularly in the mood for laughing right now given that thousands of game developers have been given in their pink slips as the punchline. Truly, only in 2026 could such an ill-received appointment be made.

Well, I just suppose it’s a good thing that PlayStation hasn’t made any controversial decisions lately… right?

— Sam Stone, Den of Geek contributor

The glimmer of good news in all of this is that some of the studios that Xbox is parting ways with have since gone independent or received new ownership. That means some of those employees continue to have jobs in the gaming industry, albeit not all of them and not with the seeming corporate security that came with being an Xbox employee. 

Double Fine, led by the makers of Psychonauts and Grim Fandango, always felt like an odd addition to the Xbox brand and going indie feels more like their natural speed. Similarly, Arkane, which is reportedly in talks to sell off to a different investor, always felt hamstrung by its corporate ownership, even with its more successful titles like Dishonored. 

These kinds of developments make me wonder how much better the industry would be without Xbox at all, if only for the sake of the working professionals whose companies were acquired, chewed up, and spit out by Microsoft.

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