Xbox Plans 3 More Layoff Waves — and a $1,800 Console

Update, Oct. 22: The fine print on the $1,800 number matters. Fortune's report puts Project Helix's $1,200–$1,800 as Microsoft's INTERNAL cost estimate — not a confirmed retail price — and says Microsoft hasn't committed to subsidizing it; without a subsidy, it takes the margin hit on software and Game Pass instead (Beebom, Analytics Insight, Phandroid). The memory-shortage angle now has detail: Microsoft raised Xbox prices on Aug. 1 (Series X $649.99→$799.99) blaming component costs up more than 2.5x, and expects them to double again by fall 2027, with AI data centers soaking up DRAM and NAND supply. And it's not just jobs and hardware — Fortune reports Game Pass is being redesigned as an à-la-carte menu (cloud gaming, online multiplayer, console library sold separately), alongside a 2027 handheld and the Helix console targeted for holiday 2028.

Xbox is done being polite about the reset. CEO Asha Sharma, the executive who has spent the last nine months dismantling and rebuilding Microsoft's gaming division, is reportedly planning three more rounds of layoffs — one this month, one in November, and one in January — according to a new Fortune profile. And just when the bad news seemed priced in, there's this: the next Xbox console is internally projected to cost between $1,200 and $1,800.

Microsoft has not confirmed the new waves, and Fortune itself cautions that layoff plans can change. But the report — carried by gaming outlets including Polygon, Notebookcheck and Android Headlines within hours of publication — describes a division still deep in the most aggressive overhaul in its history. Sharma has already cut roughly 1,900 people since July toward a stated goal of 3,200. Three more waves would carry the bloodletting into a new year.

The numbers are the story, but they aren't the whole story. Fortune's profile is really two stories at once — a reckoning for the Xbox everyone grew up with, and a pricing obituary for the one coming next. Between a flagship game that flopped its sales test and a next-gen console that costs as much as a decent used car, Xbox's reset has stopped being about trimming fat. It's about deciding what the business even is.

Photo: The Xbox Series X, Microsoft's current flagship console. Fortune reports three more rounds of layoffs are planned as the gaming division's "reset" continues. Credit: Der. Bellemer / Wikimedia Commons (CC BY 4.0).

Three more waves — with a caveat that matters

The schedule is the scoop. According to Fortune, people familiar with the plans say Sharma is preparing cuts for October, November and January 2027 — the first of which could land any day now. What the report does not say matters just as much: no headcounts per wave, no teams named, and no clarity on whether these waves fall inside the previously announced 3,200 or pile on top of it. Notebookcheck, which carried the report, was explicit on this point: the report "does not specify how many people the upcoming rounds will affect or whether they are all included in the previously announced total."

We pulled up five separate write-ups of the Fortune report — Polygon, Notebookcheck, Android Headlines, The Circuitry and the Times of India — and every one names the same three-wave schedule and the same roughly-1,900 figure. Consistent, yes. But all five trace back to the same anonymous sourcing. That's one well-sourced report, not five independent confirmations — and the article below treats it that way throughout.

The reset so far: roughly 1,900 gone, thousands to go

Sharma took over in February 2026, succeeding Phil Spencer, and quickly decided the business was, in her words, "unhealthy." An earlier staff memo reportedly acknowledged that Xbox was operating with margins significantly below comparable platform and publishing companies, after years of heavy investment in content, hardware and studio acquisitions failed to deliver the growth Microsoft expected. The prescription was brutal and immediate: cut 3,200 jobs across Microsoft's 2027 fiscal year, starting with roughly 1,600 right away, followed by another ~268 in September.

The surgery went far beyond headcount. Halo development moved to Activision. The teams behind Sea of Thieves and Age of Empires — Rare and World's Edge — were shifted into the Activision organization, and Obsidian went under Bethesda. Double Fine and Compulsion Games were released to become independent studios again; Undead Labs was divested; Ninja Theory, the Hellblade studio, faces possible closure. She called it a "fundamental reset of how Xbox operates and invests." The industry has had a simpler word for it: carnage. This is the same industry where EA just shuttered BioWare, its Mass Effect studio, after a $55 billion buyout — a reminder that the axe is swinging everywhere right now, not just in Redmond.

What makes this wave different is the calendar. The July cuts were announced as a plan; the September cuts were a round; the October–January waves are a schedule. Employees aren't being asked to survive one storm anymore. They're being asked to survive a season of them.

Gears of War: E-Day — the flagship that flopped its sales test

Then came the data that made everything worse. Gears of War: E-Day, The Coalition's long-in-development flagship, launched in early access on October 1 and in full on October 6. Early estimates from Alinea Analytics analyst Rhys Elliott put full-price sales at about 230,000 copies — 168,000 on Steam, just 62,000 on Xbox — generating roughly $37 million in revenue, about $26 million of it on Xbox's side. Microsoft has not corroborated any of these figures. Treat them as a third-party model, not an official sales report.

The other number is the one that stings: roughly 1.7 million people played E-Day through Game Pass, and 722,000 of them paid $30 for the Premium Edition upgrade just to play five days early. Count the upgrades alongside the copies and nearly 950,000 people paid something for the game — but the shape of that revenue is the problem. Elliott said Game Pass "cannibalized" the majority of full-price sales, called E-Day's $70 edition "functionally dead on Xbox," and argued that in a world without day-one Game Pass, many of those $30 upgrade buyers would have paid the full $70. Microsoft, in his telling, is charging its most engaged customers the least — leaving something like $40 million on the table.

He's right, and this is the uncomfortable heart of Sharma's reset. Game Pass was supposed to be Xbox's moat — the reason to stay in the ecosystem. E-Day suggests it has become a cannibal instead: Steam sold nearly three copies for every one sold on Xbox's own platform, and the players most eager to play handed Microsoft $30 instead of $70. When your flagship launch loses tens of millions because the subscription got there first, the "reset" starts to look less like surgery and more like an admission that the model itself is the patient. Small wonder Fortune names The Coalition as "one area of uncertainty" for the coming waves — reported speculation, but the fear is easy to understand.

Project Helix: the $1,800 Xbox

Which brings us to the second half of Fortune's report. Xbox is said to be planning a dedicated handheld for late 2027, followed by the Project Helix home console in holiday 2028 — and internal projections have Helix landing between $1,200 and $1,800 unless Microsoft subsidizes the hardware. The drivers are familiar: rising RAM, storage and GPU costs, AI-driven component shortages, and the ambition to build a high-end PC-hybrid machine.

Photo: The Xbox Series X, launched at $499.99 in 2020. Its reported successor, Project Helix, carries internal price projections of $1,200–$1,800. Credit: Der. Bellemer / Wikimedia Commons (CC BY-SA 4.0).

Let that sink in. The Xbox Series X launched at $499.99. The next one might cost more than three times that. At $1,800, you're not buying a console — you're buying a gaming PC that happens to say Xbox on the box, and Microsoft's PC-hybrid talk suggests that's precisely the point. The old console economics are breaking everywhere at once: a recent NeoGAF leaker claimed the upcoming PlayStation 6's RAM and NAND alone cost over $680, implying Sony's next box clears $1,000 easily, and Sony just skipped CES 2027 after a 60-year run, the latest sign that even the giants are retreating from the old playbook.

Whether a $1,200–$1,800 box can sell at console scale will decide whether Helix is a halo product or a hobby. The RAM crisis already pushed current-gen prices up; if the shortages persist into 2028, Sharma's expensive hybrid could launch into the worst hardware market in console history. Bold strategy. Terrifying timing.

The $1,800 question: internal cost estimate, not retail price

The distinction is the whole story here. Fortune's $1,200–$1,800 figure is Microsoft's internal cost estimate for building Project Helix — what the machine costs Microsoft to put together — not a sticker price it has approved for store shelves. Microsoft hasn't said it will subsidise the box, and without a subsidy the margin math lands on software and Game Pass instead. That's the honest reason to take the number seriously: it tells you what the hardware costs Microsoft, not what it will charge you.

It moved because the components did. AI data centers are swallowing the world's DRAM and NAND supply, so the same memory that goes into a console now competes with machines that print money for cloud giants. And the company already sells a $2,599 laptop — premium pricing isn't the alien concept. The harder question is whether a console, historically sold near or below cost to get into living rooms, can carry its own weight at all.

Handheld 2027, Helix 2028: the hardware timeline

Fortune's reporting points to a staggered rollout: an Xbox handheld by the 2027 holidays, with the full Helix console aimed at the 2028 holidays. Sharma has talked since August about a "family of devices" — the idea that Xbox stops being one box and becomes a lineup. Behind the scenes, the reporting suggests a software disagreement worth watching: the Windows team and the Xbox team see the operating-system stack differently (mp1st, via Fortune). Hardware timelines this far out shift — the same caveat that applies to the layoff schedule applies here — but the direction is clear enough: Microsoft is building a lineup, not just a successor. None of it is cheap, and the company has shown it will walk away from AI data-centre capacity it decides it doesn't need.

"Xbox is not for sale" — the denial tour

Hanging over all of this is the question Microsoft can never quite kill: is it done with gaming entirely? Back in June, The Information reported that CEO Satya Nadella and CFO Amy Hood had considered spinning Xbox out. This month, Sharma went on the record with the New York Times: "Xbox is not for sale. We will do whatever it takes to set the company up for success, and we will look at the right partnerships, the right operating model and everything needed to achieve that."

Judson Althoff, CEO of Microsoft's commercial business, made the case to Fortune: "Asha is one of the best leaders we have at the whole company. We would not have put her on a business we intend to sell. There's going to be a ton of speculation about all this. Time will tell."

Nadella himself, appearing on the Sources podcast, called the "streamlining" under Sharma "great to see" — a curious choice of words for thousands of lost jobs, and the internet noticed — while insisting that "Xbox is going to get back to growth this next fiscal year, and that's the plan they're executing on, and in that process, do a bang-up job of producing some great games." Pure Nadella: optimism as strategy.

Here's the thing, though. The denials are piling up faster than the confirmations, and Sharma is denying the sale while her own org chart gets absorbed into Activision. You don't have to be a conspiracy theorist to find the spin-off talk plausible — but Microsoft's actions say turnaround, not exit. And if you want proof the parent company still has grand ambitions, look at where the money flows: Microsoft is undercutting OpenAI's pricing by 58% with a model built on Alibaba's Qwen, pouring resources into the AI arms race. The knife comes out for Xbox; the wallet stays wide open for AI.

Game Pass goes à la carte

The subscription is getting rebuilt too. Fortune reports Game Pass is being redesigned as a pick-your-features menu — cloud gaming, online multiplayer and the console library sold separately rather than bundled. It's the same logic as the layoffs applied to the business model: stop spreading thin, charge for what costs money. For subscribers, it means the era of one Game Pass that does everything is ending; for Microsoft, it's the software side of the margin math that Project Helix's price tag forces.

Your questions, answered

Are more Xbox layoffs really happening?
Reported, not confirmed. Fortune's sources say waves are planned for October, November and January, and Fortune itself notes plans can change. Microsoft has not commented. The safe read: expect cuts; don't put them on a calendar.

Is Xbox being sold?
Sharma says no — "Xbox is not for sale" — and Althoff says putting her in charge proves Microsoft wants a turnaround, not a sale. The spin-off chatter came from a June report about options Nadella once considered, not anything on the table today.

Is Game Pass going away?
Nothing suggests it. Game Pass is the centerpiece of Xbox's strategy, and 1.7 million people played E-Day through it. The real question isn't whether Game Pass survives — it's whether day-one launches on the service are sustainable for Microsoft's own studios.

What is Project Helix?
The reported codename for the next-generation Xbox home console, targeted for holiday 2028 after a dedicated Xbox handheld in late 2027. Internal price projections: $1,200 to $1,800 unless Microsoft subsidizes the hardware.

Sources: Fortune's October 20 profile of Asha Sharma (via write-ups in Polygon, Notebookcheck, Android Headlines, The Circuitry and the Times of India); sales estimates from Alinea Analytics' Rhys Elliott via Kotaku and GameSpot; Satya Nadella's remarks on the Sources podcast via Video Games Chronicle and TrueAchievements; Sharma's New York Times comments via Polygon and Yardbarker; The Information's June spin-off reporting via Yardbarker; and this update draws on Fortune via The Circuitry, Beebom, Phandroid, Analytics Insight and mp1st.

By Daniel Rao

Daniel Rao covers the business of gaming for TechPulse USA — the layoffs, the deals, and the consoles that cost as much as a month of rent. He has watched every Xbox generation launch since the original Duke controller and still complains about it.