Microsoft could be preparing another significant round of layoffs across Xbox, with hundreds of employees reportedly at risk as the company continues restructuring its gaming division. The latest reports arrive only months after Microsoft announced thousands of Xbox-related job reductions and plans to separate several development studios from the company.
According to Tom Warren of The Verge, Microsoft is expected to announce another wave of Xbox layoffs, with sources familiar with the company’s plans indicating that hundreds of employees could be affected. Separately, The Information reports that Microsoft is also planning to consolidate several game studios, although the specific teams involved have not yet been identified.
The reports have created renewed uncertainty around Xbox’s first-party development structure. However, Microsoft has not yet publicly confirmed the reported September layoffs or revealed which studios could be affected.
Xbox Could Cut Hundreds More Jobs
The reported layoffs would represent another stage of Microsoft’s ongoing Xbox restructuring. The company announced in July that it planned to reduce its Xbox workforce by approximately 3,200 positions during fiscal year 2027, including around 1,600 immediate role eliminations.
Microsoft’s July restructuring also saw Compulsion Games and Double Fine Productions move toward independence, while Ninja Theory and Undead Labs entered arrangements to come under new ownership. Arkane’s management also began consultations regarding its future.
Xbox CEO Asha Sharma described the July changes as the company’s
“most significant restructure in XBOX history.”
Microsoft said at the time that publicly announced first-party games and projects would not be canceled as part of those reductions.
The newly reported cuts appear to be separate from that initial wave, meaning the restructuring could continue well beyond the changes announced in July.
Alongside the reported layoffs, The Information claims Microsoft intends to consolidate multiple game studios. The report does not identify the teams involved or explain how the proposed consolidation would affect individual developers and projects.
That uncertainty is particularly important because Xbox’s recent restructuring has already changed the ownership and organizational structure of several development teams.
There are also separate reports surrounding Halo Studios. Industry insider NateTheHate has claimed that the Halo franchise could move under Activision Blizzard King, although this should not be treated as a confirmed Microsoft decision. The claim concerns the franchise’s organizational placement rather than Activision or Blizzard taking direct control of Halo Studios.
For now, the number of employees affected, the studios involved and any potential changes to upcoming Xbox games remain unconfirmed. Microsoft is expected to provide more information before the latest restructuring picture becomes clear.
