Xbox boss Asha Sharma pins layoffs on Phil Spencer’s regime spreading the company “too thin”, while claiming a “a healthy Xbox” could weather the RAM storm
Xbox has announced approximately 1,600 layoffs and the closure of five studios in a significant restructuring. Xbox CEO Asha Sharma defended the decision in a Fortune interview, providing rare public criticism of the previous leadership regime under Phil Spencer. According to Sharma, the company had “made a bunch of bets” in pursuit of growth but in doing so “didn’t focus on the core business,” spreading resources too thin across various initiatives.
The restructuring reflects broader challenges facing Xbox as a gaming platform. Sharma suggested that a “healthy Xbox” would be better positioned to weather current industry challenges, potentially referencing hardware or market pressures. The layoffs represent one of the most significant workforce reductions in Xbox’s history and come as the gaming industry continues to face economic pressures and shifting consumer preferences.
The CEO’s comments represent an unusual acknowledgment of strategic missteps from the previous era, with Sharma effectively positioning the current leadership as correcting course toward a more focused business model. The closure of five studios simultaneously underscores the scale of the organizational overhaul. This move comes amid broader industry consolidation and cost-cutting measures across major gaming companies, reflecting mounting pressure on profitability and the challenges of maintaining large development portfolios in an increasingly competitive market.