It has previously been reported that thousands of cuts at Microsoft were expected next week, but now Bloomberg’s Jason Schreier has said that sources have revealed a large portion of those will come from the Xbox division.

Microsoft’s Xbox brand has experienced multiple major shifts in recent years, some of the biggest occurring within the past couple of years.

• Sales of the Xbox Series X and S hardware have consistently declined with each new projection, typically dropping by around 30% each time it is mentioned.
• Microsoft has significantly increased the prices of all its hardware due to tariffs and economic factors, particularly affecting the X and S models. Now, an S can cost more than a PS5, and an X can surpass the price of a PS5 Pro. Sony, on the other hand, has recently placed some of its hardware on sale.
• Microsoft has relied heavily on hardware partners for devices such as an Xbox-branded handheld, and as of this week, a limited-time Xbox-branded MetaQuest VR headset. The company insists it will continue developing its own next-generation hardware, although rumors suggest that an actual Xbox-made handheld may have been scrapped.

• Xbox Game Pass has become the core of Microsoft's latest strategy—a subscription service filled with a vast library of games and day-one access to first-party titles. However, after significant growth during the pandemic, the expansion of Game Pass has slowed, and it remains uncertain where new subscribers will come from.
• Xbox has opened up its full game catalog to potentially reach former competitors like PlayStation. It has brought older titles to the platform, released new games with delays, and frequently launched first-party titles on PS5 simultaneously with Xbox. Repeatedly, nothing seems off-limits anymore, and with releases now spanning PS5, Switch, and PC, Microsoft has essentially become a third-party developer offering its own subscription service and hardware—an unprecedented position in the industry.

This hasn’t been just one major move, but several, many happening concurrently as Microsoft tries to find its place in the global market. While some of these strategies might be ahead of their time, this wouldn’t be the first time Xbox was visionary to its own disadvantage. It’s still unclear how long these layoffs will persist or what plan exists to halt them moving forward.

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