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Xbox’s ‘reset’: all the news about Microsoft’s looming layoffs and studio closures

July 1, 2026 Verge Staff

The upper part of the Xbox Series X placed against a black background.

Xbox is making some big changes — again. On June 10th, a few months after Asha Sharma took over as CEO, she and newly-promoted chief content officer Matt Booty sent a memo to staff warning of an “Xbox reset.” The business, they said, is facing significant challenges, including a 3 percent “accountability margin,” massively higher component prices for consoles due to the memory and storage shortage, and an “over extended” studio system.

That same day, The Verge and Bloomberg reported that the Xbox division was planning layoffs in July. The cuts, expected to be announced on July 6th, could include studio closures or spinoffs. The Verge‘s Tom Warren reported on June 30th that Microsoft is looking at closing at least five studios and potentially canceling games like Blade.

Under Sharma’s leadership, Xbox has already made some other major changes, including upcoming price hikes for Xbox consoles, lowering Game Pass prices but cutting out new Call of Duty games, rebranding Xbox to XBOX, and making both Gears of War: E-Day and Clockwork Revolution Xbox console exclusives.

Read on for all of our coverage of the shifts at Xbox.

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