This is an important email I sent today to all employees at XBOX:
Team,
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. I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.
I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today's decisions do not reflect their talent or dedication.
Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.
First, we will reset our content portfolio.
Since 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined. We now find ourselves competing not only with the largest publishers, but also with smaller independent studios. It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested. As we reset XBOX, we will help independent creators succeed by providing open development tools and audiences to realize their vision.
Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.
We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. None of our first party publicly announced games or projects are being cancelled as part of these reductions.
In addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.
Second, we will reset our platform.
We know that great technology gets better when it gets simpler, not bigger. Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players. As we reset XBOX, we will simplify.
We will reduce management layers to no more than 5, and where possible, 3. We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes. And we will streamline how we work across our tools, with a cleaner code base, shared services, and 50% reduced vendor spend.
Third, we are resetting how we operate.
As XBOX grew our headcount, we became more fragmented. Teams, studios, and functions often operate independently, and it became harder to work towards a shared goal, make the right tradeoffs, and get things done.
For the first time, we are establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to me. Over nearly two decades at XBOX, Helen has helped build some of our most important businesses, from XBOX Live to leading Mojang and the Minecraft franchise. She will bring our businesses together under one operating model, making sure we make clear investment decisions, learn from our successes and failures, and hold ourselves accountable for results.
Thank you, Dave McCarthy, who is retiring after 17 years with XBOX. Dave has played a defining role in building the platform that millions of players rely on every day and has been a trusted partner through many of the biggest moments in XBOX's history. We wish him all the best.
These changes are about a bigger future for XBOX, not a smaller one. The next decade of gaming will be larger, more global, and more creative than anything we've seen before. This year, we'll invest as much in XBOX as we ever have, but we'll invest with greater focus, greater discipline, and greater clarity, all in service of making XBOX where the world plays and creates.
I want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect. I know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027.
History is full of companies that mistake longevity for inevitability. We will not be one of them.
Asha
From my perspective, Miyazaki is a rather unique, yet extremely serious game developer.
His career did not begin in the game industry. In fact, he didn’t become a game developer until he was almost thirty years old.
Even among developers of my generation (those of us born in the 1970s), I think it’s remarkable that someone who wasn’t even a game developer during the dawn of the polygon era eventually became one of Japan’s most representative game creators. (In other words, compared to the rest of us from the same generation—including myself—his career path is exceptionally unusual. Most notably, unlike many of us, he was not working at one of the major development studios that held a significant technological advantage during the early polygon era. That, more than anything else, is what makes his path so unique.)
Next, regarding my impression of Dark Souls.
People often focus on its difficulty as a game, but I believe Miyazaki’s true creativity shines through in the world he created. (By the way, I personally think Dark Souls has fairly simple action mechanics, and I don’t actually consider it to be an especially difficult game.)
If you look into my own career, you’ll see that I was personally involved with the Dark Souls series and Elden Ring as the General Manager overseeing both production and marketing (Just to clarify, I wasn't part of the development team itself. My involvement was simply as the General Manager of the publisher-side department overseeing production and marketing). From that perspective, I can say that Dark Souls didn’t suddenly become a massive success overnight. It was the result of everything Miyazaki and his team had built up through their previous titles.
Today, he receives offers from all over the world, but when I think back to the days when he and his team were struggling the most, many of those offers seem like they’re coming from people who only know who they are today. Some of them almost feel like complete reversals in attitude. Well, that’s just my personal perspective.
Personally, I had grown tired of people who would simply compare games by saying things like, “That title cost X billion yen to make and sold Y million copies,” and then use nothing but those numbers to judge them against other games. There were so many people who couldn’t appreciate the journey or the growth of the developers themselves. Anyone can look at the current numbers—they’re available to everyone. Whenever I heard those kinds of opinions, I always thought, “That’s exactly what you’d expect from someone who’s never actually developed games.”
What surprised me even more was that, even if people couldn’t properly evaluate that journey, almost nobody even seemed interested in trying to understand the process of how those developers gradually reached where they are today.
(I'm NOT talking about the fan community).
Now, going back to Miyazaki, there are two things about him that have always stayed with me.
The first was back when I was developing Summer Lesson for VR, around the time it was generating a lot of buzz.
One day, he came to try an early build of Summer Lesson along with people from several other game companies.
While everyone else was laughing, chatting, and having fun with it, Miyazaki alone played it with incredible seriousness. Then, after everyone had finished and started discussing their impressions, he remained completely silent, staring intently at the preview monitor, deep in thought.
Everyone became curious and finally asked him, “Miyazaki, what are you thinking about?”
He suddenly smiled and said,
“Oh… I got completely absorbed in thinking about what I would do if I were making this, and what kind of game I’d create.”
What he talked about after that was, in the best possible sense, completely insane.
It was one of those rare moments when I caught a glimpse of what I’d call his “mad scientist” side—his deeply serious, obsessive approach to creativity.
The other thing that left a strong impression on me was that he generally dislikes video interviews (including live streaming).
I once asked him about it by email, and he replied with quite a long explanation. After reading it, I completely understood where he was coming from.
Simply put, he doesn’t like watching himself moving around on video. (Psychologically speaking, it’s actually a bit more complicated than that.)
But there was another reason.
According to him, there are naturally many people in this industry who know games far better than he does. Whenever he listens to those people speak, he realizes that his own understanding is still shallow, and it makes him feel that he’s not yet in a position to be the one talking about games.
I mean… it’s common for well-known developers to say, “I still have a long way to go.”
But whenever someone like him says that, my reaction is always,
“Come on… if you say you’re still not there yet, then the rest of us won’t feel qualified to talk about games at all.” (laugh)
Anyway, that’s one of the reasons why video interviews with Miyazaki are extremely rare. And conversations with him on camera—especially long-form discussions with another developer—are even rarer. They almost don’t exist at all.
By the way, the other game developer in that photo is Masahiro Sakurai.
If you ask me, he’s basically:
“A Saiyan who genuinely believes he’s just another ordinary human.”
Every now and then, when the rest of us are struggling with some problem, he’ll say something that sounds exactly like Goku saying,
“Well… why don’t you just fly?”
And I’ll reply,
“Because we humans can’t use Flight Technique.”
Then he just stares at me with a completely puzzled look.
To put it in terms of Demon Slayer, I’d describe him as:
"Like Muzan Kibutsuji casually showing up at a drinking party where all the Hashira have gathered, genuinely believing he's just another ordinary guest".
That’s the kind of person he is.