Xbox boss Asha Sharma pins layoffs on Phil Spencer's regime spreading the company "too thin", while claiming a "a healthy Xbox" could weather the RAM storm

Xbox laid off approximately 1,600 employees this week and shuttered five studios including Arkane Studios, Double Fine Productions, Ninja Theory, Undead Labs, and Compulsion Games. In her public statement, Xbox boss Asha Sharma came closer than ever to directly blaming predecessor Phil Spencer's leadership for overextending the company across too many projects and initiatives.

Sharma's remarks suggest that Xbox spread itself too thin under Spencer's regime, leaving the division vulnerable when financial pressures mounted. She argued that a healthier, more focused Xbox organization could have absorbed the current market challenges without resorting to massive layoffs. The reference to a "RAM storm" appears to indicate broader industry headwinds and competitive pressures affecting gaming as a whole.

The closures represent a significant strategic retreat. Arkane Studios, fresh off Redfall's disappointing launch, becomes the most notable casualty. Double Fine, home to the Psychonauts franchise, also departs. Ninja Theory, acquired in 2018 for reported $20 million, exits despite developing Hellblade 2. Undead Labs and Compulsion Games round out the shutdown list.

This marks a sharp departure from Xbox's acquisition-heavy strategy of the past half-decade under Spencer's tenure. That era emphasized buying established studios and securing game franchises as part of Game Pass's content strategy. Sharma's framing suggests the strategy proved unsustainable, particularly as acquisition costs ballooned and expected returns failed to materialize.

The layoffs signal Xbox's recognition that maintaining a sprawling portfolio of studios while competing with PlayStation and Nintendo required resources beyond current allocation. Whether Sharma's comments represent genuine criticism of Spencer's approach or simply damage control remains unclear, but the statement indicates internal recognition that Xbox's previous expansion strategy required correction. The company now faces the challenge of rebuilding trust with developers and players while