Xbox Hits a Hard Reset, Redmond Workers Lose the Game
The Redmond giant eliminates hundreds of jobs, braces for thousands more
Article by Madeline Virginia
Art and photos by Jason Miller
Originally published October 5, 2026
Redmond Moments Newspaper, Fall 2026 Edition
The vibe was a little different this year at the second annual SLICE conference.
Tim Cullings, Executive Director and Board President of Seattle Indies, greeted the crowd streaming into the auditorium at McCaw Hall in Seattle. He led the audience in an interactive live survey as they submitted answers live via their phones.
A question was posed to the audience: “Which specific industry topics do you find most concerning?”
The crowd laughed as one answer on the word cloud grew bigger and bigger than the rest: LAYOFFS.
A word cloud representation of audience survey results. Photo: Madeline Virginia/Redmond Moments
The Seattle Loves Indie Creators Expo is run by the long-standing nonprofit Seattle Indies, an organization that brings the game development community together, and offers support to creators of independent video games.
The industry conference offered unique insight into a part of the community that has taken hit after hit lately. Many of the 900+ people in attendance were recently laid off by major gaming employers, like Redmond giant Xbox.
Check-in at SLICE. Photo: Jason Miller/Redmond Moments
Xbox’s Hard Reset
Both headquartered in Redmond, Xbox started as Microsoft’s answer to the gaming console twenty five years ago. CEO Phil Spencer acted as the long time leader of the company until his retirement in February of this year.
With his departure, questions were raised about the gaming company’s future strategy. As it turns out, Xbox’s outlook may be as bleak as it gets.
Just three days after Xbox’s yearly global celebration, the Xbox Games Showcase, newly minted Xbox CEO Asha Sharma shared an internal all-staff memo on Xbox.com, cosigned by Chief Content Officer Matt Booty.
The message, titled “Next 100 Days: XBOX Reset”, laid out a clear warning: a major restructuring was coming.
“For some of you, these realities will be surprising and even frustrating to discover.”
Then, on July 10, the other shoe dropped. In another all-staff email posted to Xbox.com, Sharma wrote:
“We are beginning the most significant restructure in XBOX history. After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management.”
These numbers had a massive effect locally. In the first round of layoffs in June, 605 Redmond employees were terminated. In the second round of layoffs on September 22, another 277. (Source: Washington State layoff and closure database, WARN)
Sharma also outlined a 50% vendor reduction, along with many studio game closures and ownership transfers.
“Our business today is not healthy . . . We must reset XBOX”.
Xbox strategy in recent years leaned hard into studio acquisitions. Sharma explained that the bet on massive portfolio expansion did not pay off.
“We believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. . . In a typical year, we lost 64 cents for every dollar we invested.”
A roundtable discussion at the Seattle Loves Indie Creators Expo. Photo: Jason Miller/Redmond Moments
Uncertainty meets optimism
This isn’t the first time Microsoft has made sweeping cuts– 3,199 local workers were laid off in 2023, and another 3,202 in 2025.
The reality is that tech workers have experienced massive layoff waves for years. This fresh round of employees are being dropped into an already saturated pool of applicants, made bigger with each round of cuts.
At SLICE, details hinted at the changing needs of the community. Convention passes were offered at a discount to those who recently lost their jobs. They offered panels like “You Got Laid Off, Now What?”, and roundtable discussions with industry veterans on how to market yourself in the job search.
A panel introduction slide at SLICE. Photo: Jason Miller/Redmond Moments
The gaming industry is in the middle of some dramatic changes, with a lot of uncertainty. However, it is worth noting there was an underlying optimism at SLICE, as well. Many people saw these changes as an opportunity, and were energized by networking with their peers.
Seattle Indies also celebrated their tenth year as a nonprofit. In a recap of the event, the organization wrote, “SLICE 2026 proved once again what makes our regional community so vibrant, resilient, and uniquely supportive.”
Transparency disclosure: In previous years, the author of this article and the photographer have both worked for vendor companies that provided work for Microsoft. Redmond Moments is committed to unbiased, independent research and reporting.
