In an expected announcement from Asha Sharma, Xbox announced a new round of layoffs. Nearly 4,000 people will be let go from Microsoft, starting with about half of that total number dismissed today. There’s a lot in the announcement, so here are five things to know about what Xbox is calling their reset.

3,200 People Are Getting Laid Off, with 1,600 Eliminated Today

In the Xbox Wire announcement, CEO Asha Sharma announced that Xbox will reduce its team by approximately 3,200 throughout FY27. This includes around 1,600 role eliminations today. Something that we all knew was coming is nonetheless heartbreaking to see, particularly when you think of the devastation a single lost job can cause a family. Multiply that by 1,600 today and nearly 4,000 to come in total, and we’re talking a massive hit to the lives of many people.

Management Was Even Worse Than We Imagined

Sharma revealed in the announcement that management at Xbox was a mess. We all kind of knew that, but the CEO shared that in some cases, “as many as 14 layers of management” stood between decisions and progress for the company’s games. That’s a massive amount of mismanagement, and Sharma says that, moving forward, management chains will add up to “no more than 5, and where possible, 3” people. My gut says many of the layoffs will include management folks in those 15-person chains, but the harm will certainly extend to creatives as well.

Compulsion Games and Double Fine Productions are Going Indie

Both Compulsion and Double Fine will live to see future projects as they are spinning off into indie studios. Sharma also noted that they will receive “runway for their next games,” indicating any investments Xbox has already made or promised may be honored. Both Compulsion and Double Fine are beloved studios that sort of march to the beat of their own drum, and I’m hopeful that fan support and crowdfunding can help push them toward brighter futures and more amazing projects.

Mojang and King Could Play a Big Role in Xbox’s Future

Two of the studios in the Activision acquisition, Mojang and King, are not only mobile gaming powerhouses but also relatively untapped assets for Xbox with its ownership. Asha Sharma will now have both studios report directly to her, indicating that mobile gaming could be a massive influx of focus and revenue for the company, as it currently earns 64 cents for every dollar invested. Easy cash awaits in the mobile market, and more oversight and direction could help Microsoft’s balance sheet, particularly if paired with Xbox IP that does not currently live on the mobile marketplace.

Arkane’s Future is Still Up in the Air

Lastly, France-based studio Arkane is not getting a clear path forward today. That’s because France requires consultation with companies transitioning from their current operations to protect employees. Rather than working directly with the studio to figure out what’s next, Xbox will work with mediators to find a solution to the question of what to do with Arkane. Sharma said that work with France’s “Works Council to review potential strategic options” is already underway.

What do you make of all of the announcements from the July Xbox reset? Let us know how you see the future of Microsoft’s gaming division playing out moving forward.

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