Asha Sharma marked the end of her first hundred days as Xbox chief executive with a blog post that framed the next hundred days as a "reset" for the division. In that entry she highlighted the unit's thin "accountability margin," slipping revenues, and broader industry pressures such as the global component shortage. The language—talk of being "over‑extended" and confronting "hard truths"—was a textbook signal that substantial layoffs were imminent; senior leaders rarely use such phrasing unless they are preparing for a wave of job cuts. Her second hundred‑day period wrapped up just over a week ago, and the promised reset has already produced a cascade of dismissals across Xbox studios and corporate functions, as well as the closure or sale of several development houses.
While the gaming sector has become accustomed to periodic rounds of downsizing, the scale and speed of this particular reset are unusually harsh. A true "reset" is supposed to be a single, decisive button press: a painful transition that ends with a new, stable baseline for the organization. In practice, however, Xbox is still experiencing uncertainty and volatility.
Employees continue to face daily anxiety about potential redundancies, and the company has yet to deliver the stability that a genuine reset should provide. Just this week another 268 positions were eliminated, adding to the roughly 1,600 jobs already cut. At the same time, Xbox reshuffled its studio hierarchy, acknowledging that no buyer has materialized for Ninja Theory—a studio now likely headed for closure.
The fate of Arkane, the last of the studios slated for divestiture, remains unresolved. These moves are not merely the final tweaks to a plan that should have concluded after the advertised hundred‑day window.
Earlier this summer Xbox announced a target of 3,200 job cuts, and even after the latest round the company still has hundreds of positions to eliminate before reaching that figure. The original "hundred‑day" label appears to have been a catchy headline rather than a concrete timeline; no one can currently predict when the reset will truly finish. Compounding the problem is the absence of a clear, communicated vision for Xbox's post‑reset structure.
Recent studio realignments have shifted major properties—Obsidian now sits under Bethesda, while Activision effectively oversees the Halo franchise and the venerable Rare studio, one of Microsoft's earliest big Xbox acquisitions. In effect, flagship studios and intellectual property are being moved out of the core Xbox Game Studios umbrella and placed under the larger publishers Microsoft acquired to boost the console business. It is unclear how this reallocation aligns with earlier statements that the reset would flatten management layers and give developers more direct oversight. The moves seem more consistent with a long‑standing, partly tongue‑in‑cheek speculation that the acquisition of Activision Blizzard would eventually result in Activision taking the reins of Xbox, rather than the other way around.
Observers note the irony of Halo—Xbox's premier IP since the first console launch—now residing within Activision, while the internal Halo Studios team is being gutted. There are pragmatic financial explanations for these shifts. By moving high‑value studios and IP into the Activision and Bethesda business units, Microsoft may be attempting to cushion the impact of future impairment charges on its balance sheet. The Activision Blizzard purchase was made at the peak of that company's valuation; re‑bundling valuable assets under those entities could make the overall book value appear less impaired to investors.
A more conspiratorial reading might suggest that Microsoft is positioning itself to exit the games business without taking a massive loss. A buyer for the entire Xbox hardware and services operation is unlikely given the current component cost crisis and the broader challenges facing console manufacturers. However, a buyer for Activision Blizzard and Bethesda—if those assets are packaged with their most lucrative franchises—could fetch a respectable price, allowing Microsoft to retreat from the consumer gaming market while preserving its reputation.
I remain skeptical of that scenario. My assessment of Microsoft's willingness to sell the games division has not changed in recent months.
Even though some senior leaders appear hostile to the gaming segment, the company would likely find it humiliating to write off tens of billions of dollars and publicly abandon a major consumer-facing business. Moreover, finding a purchaser willing to pay a price that preserves the value of Activision Blizzard—especially with Halo as a bargaining chip—seems doubtful. The overall picture is one of incoherence. While a handful of studios remain within Xbox Game Studios—such as the remnants of Halo Studios, the merged Playground Games/Turn 10 team behind Forza, The Coalition for Gears of War, and InXile Entertainment for Clockwork Revolution—most of the marquee IP has been reassigned to the larger Microsoft publishing arms.
If the goal is to shift development oversight away from Xbox Game Studios, it is unclear why these particular studios were exempted. Perhaps Microsoft plans to continue the gradual “Band‑Aid” approach, pulling studios out one by one rather than executing a swift, decisive cut.
Mojang, the creator of Minecraft, also warrants mention. The studio sits directly under the Xbox umbrella alongside Activision and Bethesda, yet its future strategy remains vague. Minecraft continues to generate massive revenue, but how Microsoft intends to integrate that cash cow into its broader vision is still a mystery. Adding to the confusion is the recent acquisition of publishing rights to Hideo Kojima's upcoming title, tentatively called Physint, after Sony withdrew from the partnership.
This move commits Microsoft to a high‑budget, long‑term project that likely will not launch until 2030 or later—an odd choice for a company currently obsessed with cost‑cutting and efficiency. Individually, each of these decisions could be justified. Securing Kojima's next game might be a masterstroke; placing Halo under Activision could leverage that publisher's expertise in first‑person shooters; moving Obsidian under Bethesda aligns with its work on a new Fallout title; and trimming Xbox Game Studios might reduce bureaucratic bloat.
Yet when taken together, they lack a unifying strategic narrative. The absence of a clear roadmap is especially problematic as Microsoft prepares to announce its next‑generation console. Like Sony, Microsoft will soon have to reveal the specifications, pricing, and value proposition of its upcoming hardware—likely a system priced well over $1,000.
Convincing consumers to invest in such an expensive platform requires a compelling, coherent story about what the console will deliver over its lifespan. Without a solid, well‑communicated vision, that story will fall flat. In short, the Xbox reset has become an open‑ended, poorly articulated process. The company continues to shed jobs, shuffle studios, and reassign prized IPs without offering a clear picture of the end state.
Until the restructuring concludes and a concrete strategic plan emerges, Xbox risks losing both internal morale and external consumer confidence, jeopardizing its position in an increasingly competitive gaming market.