Microsoft announced on Monday that it is resetting its video game business, eliminating about 3,200 jobs through the 2027 fiscal year and ending its direct management of four studios. CEO Asha Sharma communicated the plan in a letter to employees and a public post, stating that the initial wave of layoffs would involve roughly 1,600 positions. The studios Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs will leave the Xbox umbrella; Compulsion and Double Fine will return to independent operation under their current management, while Ninja Theory and Undead Labs will be acquired by unnamed entities. Arkane Studios in France is conducting required consultation with its Works Council to assess strategic options. Microsoft said it will shift investment to higher‑priority projects, cut management layers to three to five, and establish a chief operating officer role. Publicly announced first‑party games and ongoing projects will not be cancelled, and Mojang, the developer of Minecraft, and King, the creator of Candy Crush, will remain within Microsoft and report directly to the CEO. Sharma noted that the company’s margins are up to ten times lower than those of comparable firms. The next Xbox console, code‑named Project Helix, is planned for release and will support both Xbox and PC games.