Microsoft’s Xbox division is planning major layoffs next month and significant cuts to marketing and other budgets, Bloomberg News reported on Wednesday.

The job cuts would mark the first major restructuring under Asha Sharma, who took charge as CEO of the gaming unit in February. Microsoft did not immediately respond to a request for comment.

Xbox has faced mounting challenges in recent years as Microsoft’s bet on subscriptions and cloud gaming failed to offset declining console sales and a shortage of blockbuster titles.

Sharma said Xbox’s accountability margin had fallen to 3% and that the company had spent more than US$20-billion on content, platforms and hardware subsidies over the past five years even as annual revenue declined by nearly half a billion during that period, Bloomberg reported, citing an internal e-mail to employees.

She said Xbox would need to rebuild its platform infrastructure and rethink its portfolio in the weeks and months to come, the report said.

The exact scale of layoff is not yet clear. It is expected shortly after the close of Microsoft’s fiscal year on 30 June, according to the report.

Read: Microsoft slashes Xbox Game Pass prices in big strategy shift

In April, Microsoft lowered prices for its Game Pass service and ended day-one releases of future Call of Duty titles on the platform, marking one of the first major strategy changes under the new gaming chief. — Harshita Mary Varghese, (c) 2026 Reuters