Xbox Reportedly Planning Major Layoffs, Accountability Margin at Just 3% - News
by William D'Angelo , posted on 10 June 2026 / 4,629 Views
Xbox is reportedly planning major layoffs in July, according to people familiar with the company’s strategy that spoke with Bloomberg's Jason Schreier.
The number of people laid off isn't known, however, they expected to happen shortly after the end of Microsoft's fiscal year on June 30. There are also plans to cut budgets for marketing and some other areas of the business.
New Xbox CEO Asha Sharma took over earlier this year and last week stated, "We are not in a healthy spot. The next 100 days is going to be about resetting the business."
Asha Sharma and Matt Booty have posted its message that was sent to Xbox employees online. Read the full message below:
Team,
Over the first 100 days together, we have started to revive XBOX.
Our platform teams have already shipped more updates in the last 100 days than during the prior year combined. We now have more active partners on XBOX than ever before. Our Game Pass team set to work fixing our offering and after 8+ months of decline, our service has started to grow again. And through Player Voice, we have a 24/7 channel to hear directly from players, creators, and developers.
With the XBOX Games Showcase and the return of FanFest, we brought together hundreds of millions of fans globally. We reintroduced exclusives with Gears of War: E-Day in 2026 and Clockwork Revolution in 2027. Players can continue to expect signature exclusives from us every year. In parallel, Playground Games reminded us that established franchises can achieve incredible new highs.
These results are early, but they demonstrate what is possible when we move faster, stay close to our community, and align behind a shared vision. We have made mistakes, and will continue to make them, but what matters is that we listen, learn, and adjust the course where needed. Remember, our fans are rooting for us.
Now we start the next 100 days. It is important to have both optimism and realism as we work to reset the business.
Here are the realities that we need to navigate:
#1: Over 1 billion players choose to play XBOX and our games each year, for a total of 72 billion hours across Console, PC, Mobile, and Streaming (excluding much of China and a few other properties). Our franchises are also among the largest and most beloved globally and are now breaking records in TV and film. Going forward, our competition is attention. There are more great games, TV series, franchises, creators, content formats, apps, etc., than ever before.
#2: We will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.
#3: We are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.
#4: We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.
#5: Our current platform infrastructure is not built for the battle ahead. Our systems are overly complex, spanning hundreds of dependencies, which hinders our ability to move fast. We’ve become too reliant on vendors to operate our systems and must become more self-reliant as an engineering culture to build for the future. We must increase the value we ship to players while decreasing the time it takes to do so. Going forward, we’ll evolve and rebuild our stack and look at capabilities across all of XBOX and potential M&A to help us win in hardware, PC, mobile, and streaming.
For some of you, these realities will be surprising and even frustrating to discover. We won’t succeed by hiding hard truths, nor will we succeed by doing the same thing and expecting different results. Like the ‘everyday wins’ mentality from the first 100 days, we will sprint to make progress against hardware, content, experience, and services together.
XBOX is one of the few places where people come not just to play, but to connect with others to create memories. With console at the center of how our showcase experiences are defined, Windows as one of the largest gaming platforms in the world, and incredible games under our roof as one of the largest publishers in the world, we have the foundation in place.
Let’s reset for a stronger XBOX and build the #1 gaming and entertainment company.
Asha and Matt
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
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They laid off their players first.
lol
People need to accept that this industry will always have layoffs. Some they claim and not claim. Its a never ending circle. I am suprised people still act suprised by this news.
It will unless we elect politicians actually interested in labor protections. Our current administration seems to be in another universe, as far as that topic is concerned.
Its a buisness. Layoffs will always happen. The fridge you brought probably had staff lay offs. Buisnesses base their actions off performance. If staff are not preforming or the buisness isnt, people will be let go.
You can also hurt a buisness by forcing them to keep staff that underperform due to special protection.
Work hard and remove yourself from the bottom 10% of underperformers and your chances of staying in the buisness increases. Otherwise someone else will be given a go.
In alot of cases, its not the staff's fault the business isn't doing good. For example, the staff is not responsible for GamePass losing subscibers for 8 months in a row. The staff was not responible for the Outer Worlds bombing. The staff is not responsible for people not buying Xbox. The staff is not responsible for 'This is an Xbox'. But the staff is always expected to bear the brunt of the for loses.
I once worked for a company that suffered major layoffs due to the fact that the upper management made several mistakes that cost the business millions. it wasn't that we weren't working hard enough.
Crap, as they say, usually flows downhill.
Staff are also not losing their jobs for the reasons you think either.
Just because something doesn't sell doesnt mean its a straight sacking of staff.
You also need to understand reality. All buisnesses across the globe have lay offs, Sony is a Market leader and had lay offs, why? They weren't the ones losing GamePass subscribers. Its buisness. They all cut the fat and try to be more efficient by spending less.
Also have to toss up, whether you want your favourite company to continue to make games or to be shut down because you want to save staff that might not have been great employees to the buisness. We won't know but someone getting sacked isnt always a bad thing, they could also be toxic employees.
At what point do the people in charge of the business start taking accountability? A lot of Xbox's problems are coming from the top down.
What do share holders do when a buisness underpreforms?
You mean the pump-and-dump people? If they were smart, they'd be demanding that Nadella clean house at the C-suite level.
Xbox has always had garbage management. They should have sacked Phil Spencer years ago.
Phil kept the Xbox afloat at the times the brand was in danger. Now its a fresh face to take the next step.
I don't think anyone here is acting surprised by this news.
Layoffs are not flat, they go through fluctuations and when the layoffs we see are direct results of failing business or shifts in the industry it will always be relevant news.
Incorrect. Market leaders also have layoffs. Sony will announce layoffs soon, what will be their excuse? Are they a failing buisness?
They haven't just thrown Phil Spencer under the bus, they're driving back and forth over his corpse.
And for the worse it seems
Replaced by AI.
Yes! You have identified beautifully exactly what many experts have concluded by making such an astute and well-through-out deduction...
Can't wait for the usual suspects to spin this as hard as they can. 3% accountability margin is working in the red.
And studio closures aren't off the table.
No real way to spin this (oh who am I kidding) but even her tone is very somber and much more negative than I would have thought. I feel like she answered the question. No one else in the world uses an annountability margin. It that means that the regular metrics must be in the toliet.
Also, no one seems to be noticing that she is saying that the next Xbox will probably be made by third parties.
A shitty Asus box with an Xbox UI skin. Xbox fans will keep saying it is a console.
Lol bro, just say you dont know what a console is without saying you dont know what a console is.
Man, the most embarrassingly ignorant Xbox defence force has arrived. If you cannot differentiate then your Xbox shaped identity needs therapy.
Just when you think the bar is low, it finds a way to get lower.
The internet never seems to disappoint.
Or I was thinking more like tied to 3rd party services, such as your subsidized Xbox now needs an active Amazon Prime subscription to work. Or leasing etc. Maybe packed with 3rd party game subs like EA.
Of course, they are probably considering all that AND outsourcing the hardware like you said. We´ve already seen the problems with 2 performance specs this gen, with problems for performance/optimization even impacting game launch schedules. That just isn´t justifiable when their overall console numbers are so deep in decline, so what will the impact of even more SKUS be? Zero optimization, when that is the only thing keeping consoles on-par with low-mid PCs, and of course the basis for a consistent experienc which people expect from a console brand.
Regardless, this all implies an implosion in the coherence of Xbox platform.
Of course this is on top of the chip and RAM shortage. IMHO the only hope for anybody is waiting for more chip fabs to come online and get a big contract locked in when prices drop, probably in the context of global recession which USA is intentionally triggering.
Major layoffs on Microsoft is such recorrent news I don't even want to know how much they downsized in the past 3 yeaes.
I added a new video discussing all this at the bottom of the article. But here is a link to it as well. There was a lot to go over.
https://www.youtube.com/watch?v=3dHdG_aX05Y
https://videocardz.com/newz/xbox-reportedly-loses-hundreds-of-dollars-per-console-as-microsoft-weighs-xbox-spinoff-options
It's dead in my opinion. It is just kicking the can further.
Isn't the AI craze wonderful? 🙄
What do they mean by ‘accountability margin’?
Accountability margin is not accounting for the other divisions expenses. So if Xbox taps into Azure those costs go into Azure's accounting. It was explained during the ABK trial.
It´s a bullshit MS-invented term, but seemingly doesn´t differ in it´s content from operating margin. I discussed that in the actual forum thread for this topic: https://gamrconnect.vgchartz.com/thread/250554/bloomberg-xbox-profit-margin-just-3-major-layoffs-next-month/1/#5
I do have questions about how much they can get away with using word games like this. If it substantively is identical to operating margin, then it seems arguable that they are obliged to treat it the same as that, and in fact transparently communicate the division´s operating margin to the public instead of obscuring it as currently the practice.
Legally speaking, they don't have to communicate much by division. They have to communicate company-wide numbers. Also, every public company makes up metrics to obscure poor performance.
Or accountability to the shareholders, I guess?
It's PR. Profit margin is something that lay-people can understand. Accountability margin sounds like corporate-speak. If you say your profit margin is X, the lay-person can become outraged quickly, especially when it's in the hundreds of millions of dollars range. It also instantly signals to said person that XBOX is a business and not their friend... which is the bane of all corporations. They need people not to look at the man behind the curtain etc.
Man, she should have come in on a consultant title and had Phil do the layoffs before he retired. She's gonna become the villain far too soon.
These companies have gotten bigger, but their software output isn't changing much.
Their software output has dropped like a brick over the last 20 years, on a per-employee and per-dollar invested basis.
