Microsoft’s Xbox division is bracing for what reports suggest could be a sweeping round of layoffs in July 2026, and unionized workers are pushing back hard. The Communications Workers of America (CWA), which represents thousands of gaming industry employees, is calling on Xbox leadership to negotiate in good faith, provide transparency, and adopt meaningful layoff protections before any cuts take effect.
A Storm Clouds Over Xbox
Rumors of significant job cuts at Xbox have been swirling since early June, following a memo from new Xbox CEO Asha Sharma and Chief Content Officer Matt Booty. In that memo, which marked the first 100 days of new leadership, the executives warned that the division’s spending was unsustainable.
“We have found ourselves over-extended as we executed on changing strategies in a landscape of more readily available content,” Sharma and Booty wrote.
The numbers are stark. Over the past five years, Xbox spent more than $89 billion on investments and studio support — including the landmark $69 billion acquisition of Activision Blizzard King in 2023. Yet during that same period, the segment’s annual revenue declined by nearly half a billion dollars. “Going forward, this cannot continue,” the memo stated ominously.
Shortly after, reports emerged that Xbox was shuttering or selling off three studios: Double Fine, Ninja Theory, and Compulsion Games.
Union Leaders Speak Out
During a media call on June 29, CWA officials and Xbox employees delivered a clear message to leadership. CWA District 9 Vice President Frank Arace argued that “the money is there” to keep Xbox teams intact but that executives are redirecting funds with little regard for the human cost.
“We’re here to say this plainly: Those workers will not be treated as disposable,” Arace said.
UVW-CWA Treasurer Sherveen Uduwana pointed to Microsoft’s recent business decisions as evidence that the company can afford to protect jobs. Microsoft has raised console prices three times this year, while CEO Satya Nadella personally earned $96 million in 2025.
“There is no shortage of wealth in the games industry, especially if we’re talking about Xbox, Sony, EA,” Uduwana said. “These multibillion-dollar organizations are choosing to not support their developers.”
Workers Share Their Stories
Four Xbox employees and CWA members spoke publicly about working under the constant threat of sudden layoffs. Morgan Goin, an encounter designer on Elder Scrolls Online, described losing years of accrued benefits when Xbox abruptly closed Arkane Austin and then waited a month before transferring some developers to ZeniMax.
Blizzard story editor and franchise developer Alison Veneto noted that each round of layoffs strips studios of both incredible talent and years of institutional knowledge. “Work with us,” Veneto said, addressing Microsoft directly. “Adopt meaningful layoff protections.”
Activision QA tester Andrew Snell summed up the frustration felt by many: “We’re done paying for executives’ failures.”
A Growing Labor Movement
The CWA now represents roughly 3,500 workers across the video game industry, and its membership continues to grow. In 2023, roughly 300 QA workers at Microsoft subsidiary ZeniMax Online voted to unionize, forming the largest video game union at the time. Their contract with Microsoft was ratified in June 2025, including minimum salary requirements, wage increase frameworks, and AI usage protections. Multiple studios across Xbox — including Raven Software and Blizzard teams working on Overwatch and Diablo — have followed suit.
What Comes Next
For now, CWA is calling on Xbox executives to sit at the negotiating table in good faith and respond to workers’ demands for transparency, support, and job security. A common refrain from employees is that Microsoft has shown little interest in actually negotiating, leaving proposals on the table for months and failing to give proper attention to meetings.
Unions representing ZeniMax and other Microsoft studios have successfully secured certain protections for all Xbox developers, but the framework around layoffs and studio closures remains dangerously vague. With July approaching and mass job cuts potentially imminent, the clock is ticking for Xbox leadership to demonstrate that they value the people who build their games as much as the bottom line.