Microsoft Xbox announces 5,000 layoffs and moves away from physical discs

Microsoft confirmed that its Xbox division will cut about 5,000 jobs, roughly 20% of the unit, and will separate five internal teams. The cuts come as the company ends development on the cancelled project Avowed 2 and accelerates work on a new Fallout title, shifting its strategy toward exclusive releases after Game Pass subscriber losses.

The European Union also signaled that it will not intervene to preserve physical media for consoles, allowing Sony’s PlayStation to transition fully to digital distribution. In parallel, a hidden bug in Windows 11 has been reported to cause unexpected loss of up to 500 GB of storage, while Netflix is experiencing a sharp decline in viewership after the launch of its latest series.

These developments highlight a broader industry move toward digital‑only models and raise concerns about job security within the gaming sector.