The announcement comes three months after the firm closed its huge merger with Activision-Blizzard.
Almost 2,000 workers in Microsoft’s gaming division are to be laid off after its $69b (£54.3bn) merger deal.
A memo from Xbox boss Phil Spencer sent to workers says the company plans to shed 1,900 of its 22,000 staff.
It was sent three months after the software giant acquired Activision-Blizzard, known for the Call of Duty and Warcraft series.
In the letter, verified as genuine by Microsoft, Mr Spencer says losing staff was a «painful decision».
First published by tech website The Verge, the message suggests staff within the Xbox division and at publisher Zenimax — which oversees studios including Bethesda and Arkane — will also be affected.
