Xbox Restructuring Brings Studio Spin-Offs and Major Game Pass Adjustments
Leadership confirms the division is not for sale while cutting thousands of roles and altering subscription releases.
A sweeping corporate restructuring at Xbox is reshaping Microsoft's gaming division through studio spin-offs, service alterations, and thousands of job cuts following confirmation that the platform will remain under its parent company. Speaking to The New York Times, Xbox CEO Asha Sharma stated that the brand is not for sale, adding that leadership will pursue the operating models and partnerships required to ensure long-term stability.
The operational pivot involves significant workforce reductions alongside developer departures. Eurogamer details 3,200 planned job cuts targeted before summer 2027, the spin-off of Double Fine, Compulsion Games, and Undead Labs into independent developers, and internal transfers placing Halo, Rare, and World's Edge under Activision. Polygon, which reported that Sharma succeeded Phil Spencer in February 2026, cites four divested studios and notes that thousands of redundancies have already taken place with additional cuts scheduled.
Platform strategy has simultaneously shifted away from its prior subscription model. Changes to Xbox Game Pass include reduced subscription prices, time limits on cloud gaming, and the removal of same-day releases for Call of Duty. On the publishing side, Xbox secured global publishing and multimedia adaptation rights to Kojima Productions' Physint after funding was cancelled by PlayStation, while continuing hardware development on its next-generation console, Project Helix.
