Microsoft announced yesterday it would lay off 4,800 staffers, including 1,600 roles that were eliminated from its Xbox division yesterday. An additional 1,600 roles will be eliminated at Xbox through the fiscal year.
In an email to staffers, Xbox CEO Asha Sharma said the company “bet on [subscription service] Game Pass, multi-platform, and a broader portfolio of content” to progress, but that “they did not grow at the pace we expected.”
In the email, Sharma also announced structural changes to the company. Xbox’s corporate vice president of product services Dave McCarthy would leave his role after eight years. Helen Chiang, the corporate vice president of Minecraft, was named as the company’s COO—a newly formed role that includes “end-to-end P&L responsibility across content, hardware, platform, and services.”
In the past, the company’s studios and teams operated independently. Chiang would “bring our businesses together under one operating model,” Sharma outlined, “making sure we make clear investment decisions, learn from our successes and failures, and hold ourselves accountable for results.”
Before the layoffs were announced, other Xbox heads stepped away from the company. In June, Xbox Game Studios head Craig Duncan stepped down from his role after joining the team in November 2024. The company’s chief of staff Louise O’Connor also departed from the company.
Fast Company reached out to Xbox for comment.
As part of “the most significant restructuring in Xbox history,” many staffers with decades of experience at Microsoft and Xbox had their roles eliminated.
One of those Xbox employees was Kevin LaChapelle, who, according to his LinkedIn profile, joined Microsoft in 1989 as a software designer engineer and worked his way up the ranks to vice president and general manager for xCloud, which became Xbox Cloud Gaming. The 37-year Microsoft veteran helped spearhead the development of backwards compatibility, a feature that lets modern consoles play video games made for older Xbox systems.
“I will add my name to the list of people who were laid off today at Xbox,” LaChapelle wrote in a LinkedIn post. “This ends my 37 years at Microsoft.”
“I have worked in many different parts of the company, and I will say my fondest memories are of leading the team of very talented engineers who built the Xbox Backward Compatibility program,” LaChapelle wrote. “Sitting in the auditorium when Phil announced the program at E3 2015 was incredible. The audience’s reaction was unbelievable. I followed that with leading the team who created our Cloud Gaming product.”
“I am a firm believer that all entertainment will eventually become streamed to you wherever you are,” LaChapelle added. “I look forward to watching how Xbox evolves going forward and I wish the team nothing but success.”
In response to a comment about his tenure at Microsoft, LaChapelle said: “there aren’t many of us that have lasted this long. I’m waiting for [the] final count, but I am guessing I am leaving around 40 on the company seniority list.”
LaChapelle declined Fast Company’s request for comment.
While the industry knew Xbox was struggling, the scale and timeline of the cuts—and the studio closures—took some by surprise.
Microsoft-owned ZeniMax Media was not one of the impacted development studios, but the union of its subsidiary Bethesda Game Studios said in a Bluesky post that “many” of its development team were impacted by the layoffs.
“Yesterday’s layoffs at Bethesda Games Studios were not a cut of ‘14 management layers,’” the union wrote in a separate post. “We lost dozens of programmers, artists, designers and testers. Many of whom worked at BGS for decades.”
