More bad news may be on the way for Xbox employees. According to a new report, Xbox CEO Asha Sharma is planning three more rounds of layoffs at Microsoft's gaming division, with the first expected this month, the next in November and a third in January.
The details come from a lengthy profile of Sharma published by Fortune earlier this week. Citing people familiar with the plans, the report says the next rounds of cuts are scheduled for October, November and January, though it also notes that layoff plans can change.
Where The Xbox Cuts Stand Right Now
The new waves would be part of a larger plan Sharma laid out earlier this year. Xbox announced in July that it intended to reduce its headcount by 3,200 people over Microsoft's 2027 fiscal year as part of a reset meant to return the division to profitability. Around 1,600 roles were cut at that time, making it the largest single round so far.
A second round followed in September, when another 268 roles were eliminated. That wave came with a major shake-up of the studio structure, with Obsidian moving under Bethesda while Rare and World's Edge joined Activision. The Halo franchise was also handed over to Activision around the same time.
According to the report, Sharma has cut 1,868 people so far. That leaves roughly 1,300 more positions to go before Xbox hits its 3,200 target, which lines up with the idea of several smaller waves over the next few months instead of one big round.
The profile also describes the toll this approach has taken on staff. Some employees reportedly appreciated Sharma's transparency, but the decision to stretch the layoffs across several waves has left others demoralized and feeling like they are sitting under a yearlong cloud, waiting to find out if their role is next.
Fears At The Coalition After Gears Of War: E-Day
The report does not say which teams will be affected by the upcoming cuts, but one studio has been the subject of plenty of concern. The Coalition just shipped Gears of War: E-Day, one of the biggest Xbox releases of the year.
Eurogamer, which highlighted the new layoff timeline, has previously reported on worry among developers at The Coalition that the studio could see cuts once E-Day was out the door. None of that has been confirmed by Microsoft, but the timing of the next waves will put a spotlight on studios that recently wrapped up major projects.
The broader restructuring has already changed the shape of Xbox's first-party lineup. Over the past few months, Double Fine and Compulsion Games have been allowed to become independent again, while Hellblade developer Ninja Theory has been reported as at risk of closing.
With October already more than halfway over, the first of the new waves would likely be announced within the next week or two if the timeline holds.
Project Helix Could Cost Up To $1,800
The layoff news arrives alongside some eye-opening details about the future of Xbox hardware. According to the report, Microsoft is planning a next-generation handheld device for the 2027 holiday season, followed by its next home console under the Project Helix banner in time for the holidays in 2028.
The bigger shock is the price. The report says the Helix console has internally been projected to cost consumers between $1,200 and $1,800 unless Microsoft decides to subsidize it. That would make it by far the most expensive console Xbox has ever sold, and well beyond what most players are used to paying for a new generation of hardware.
Sharma has also reportedly had to manage a turf battle between the Xbox and Windows teams over the software that will run on Helix. Windows leaders wanted the upcoming handheld to use a trimmed-down version of Windows Home, while Sharma's team pushed to build its own software for better gaming performance. A senior Xbox executive reportedly threatened to scrap the handheld entirely rather than adopt the Windows build. Xbox now largely controls the direction of the operating system, though Sharma stressed that the two groups still work closely together, saying "We can't build Helix on our own."
Xbox CTO Scott Van Vliet pushed back on how that clash was characterized after the report spread. He wrote on X that "Helix OS is being built on Windows, and the Xbox and Windows teams are working closely together on the next generation of devices," adding that the account cited in coverage of the report misrepresented both the technical work and the relationship between the teams.
Game Pass Changes And The Road Ahead
The report also says Xbox is planning a major overhaul of Game Pass that would let players pick features a la carte, with add-ons for console-only games, cloud gaming and multiplayer inside a tiered structure.
The profile also addresses the ongoing speculation that Microsoft could be preparing to sell or spin off Xbox. Microsoft commercial business CEO Judson Althoff downplayed that idea, telling the outlet "We would not have put her on a business we intend to sell. There's going to be a ton of speculation about all this. Time will tell." Sharma herself has previously stated publicly that Xbox is not for sale.
The next big test comes with Microsoft's quarterly earnings report later this month, which should offer a clearer look at how the gaming division is performing in the middle of all these changes.
Microsoft has not officially confirmed the timing of any new layoffs, so it remains to be seen whether the October round lands as described. Either way, it looks like the restructuring at Xbox is far from finished.
Do you think these cuts will get Xbox back on track, or is the brand losing too much talent along the way?
Let us know your thoughts in the comments below.