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Microsoft to lay off 605 employees at Redmond, WA location in major Xbox overhaul

By
FOX 13 Seattle
Microsoft
Published July 6, 2026 1:32 PM PDT
Published July 6, 2026 1:32 PM PDT

The Brief

    • Microsoft filed a WARN notice Monday revealing 605 permanent layoffs at its Redmond location, effective September 4.
    • The cuts are part of a massive Xbox restructuring that will eliminate roughly 3,200 roles globally throughout fiscal year 2027.
    • The overhaul includes spinning off four major game studios, including Double Fine and Ninja Theory, back to independent status or new ownership.

REDMOND, Wash. - Microsoft is laying off 605 employees at its Redmond location as part of a sweeping restructure of its Xbox gaming division.

A Worker Adjustment and Retraining Notification (WARN) notice posted July 6 confirmed that the permanent job cuts will take effect on Sept. 4. The Redmond staff reductions are part of a broader plan to eliminate approximately 3,200 roles globally throughout fiscal year 2027.

The wider downsizing began immediately with roughly 1,600 role eliminations on Monday, according to an internal message from Xbox leadership published on the company's website.

Sweeping restructuring, studio divestments

The layoffs and restructuring follow a period of weak core business growth, low operating margins, and a severe hardware crisis within the gaming industry. Xbox leadership stated the company is operating at margins three to 10 times lower than comparable platform and publishing businesses.

As part of the reorganization, four prominent video game studios will transition away from Xbox ownership to new management. 

Compulsion Games and Double Fine Productions will return to independent operations, while Ninja Theory and Undead Labs will join new ownership groups.

In France, Arkane management is entering mandatory consultations with its Works Council to review strategic options. Despite the reductions across multiple units, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, management confirmed that no publicly announced first-party games or projects are being canceled.

microsoft sign at campus in redmond wa

A sign is seen at the Microsoft headquarters on July 3, 2024, in Redmond, Wash.  (David Ryder/Getty Images))

Organizational flattening, leadership shifts

Xbox plans to significantly streamline its corporate structure by reducing its current management layers from as many as 14 down to a maximum of five. 

Platform teams grew by 40% over the current console generation despite experiencing declines in both player base and overall playtime.

The company will also cut its vendor spending by 50% and implement a flatter organization focused on individual creators and directly responsible individuals. Under the new structure, the major gaming studios, Mojang and King, will report directly to leadership.

To centralize operations, Helen Chiang has been promoted to the newly created role of Chief Operating Officer, where she will oversee end-to-end profit and loss responsibilities across content, hardware, platform, and services. Concurrently, 17-year company veteran Dave McCarthy is retiring from his leadership position.

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