Microsoft Cuts 3,200 Xbox Jobs Then Drops The July Game Pass List

Xbox has revealed its first Game Pass titles for July 2026, just days after announcing the largest layoff and studio closure in the platform's history.

Microsoft's Xbox is in the middle of a historic reset.

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Key points generated by AI, verified by newsroom

• Microsoft cuts 3,200 Xbox staff due to underperforming Game Pass.
• Game Pass subscribers at 30 million, well below 77 million target.
• New Game Pass titles include Tony Hawk, Palworld for July.

Microsoft has revealed the first wave of Game Pass titles for July 2026, just days after Xbox CEO Asha Sharma announced the removal of 1,600 staff, with another 1,600 set to follow over the next 12 months. Four studios have also been cut from the company. 

Sharma described the restructure as the "most significant in Xbox history," pointing to Game Pass subscription numbers falling well short of internal targets as a core reason behind the decision.

Why Did Microsoft Say Xbox Is Not In A Healthy Place?

Sharma was direct in her assessment of where the business currently stands. "Our business today is not healthy," she said. "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 have not grown 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 the Xbox."

According to The Wall Street Journal, Microsoft had expected Game Pass to reach around 77 million subscribers this year, but the service currently sits at roughly 30 million. Documents from the 2023 FTC vs Microsoft trial had previously shown the company was targeting 100 million subscribers by 2030.

What Games Are Coming To Game Pass In July 2026 Wave 1?

Despite the turbulence, the July Wave 1 lineup includes notable titles. Tony Hawk's Pro Skater 1+2 and Palworld 1.0 are among the highlights, with Palworld's full launch set for July 10. 

Winds of Arcana: Ruination became available on July 6, while Ascend to Zero is the only day-one title, arriving July 13. Gears of War: Reloaded and The Planet Crafter round out some of the bigger additions later in the month.