Xbox to Announce Major Layoffs Next Month, Studio Closure Possible

On Sunday, the company unveiled a fresh slate of titles for Sony’s platform, spotlighting the upcoming releases of State of Decay 3 and Senua.

In addition to the new games, the announcement reaffirmed the return of console exclusives, with the studio hinting at a stronger focus on exclusive titles should its financial health improve.

However, Bloomberg’s paywalled report signals a looming wave of layoffs that could reach into the thousands, and The Verge has warned that a studio shutdown may be part of the cuts.

According to journalist Jason Schreier, the layoffs are slated to be announced shortly after Microsoft’s financial results on June 30th, with additional budget reductions expected in areas such as marketing.

Xbox’s latest internal memo, now publicly released on the Xbox Wire, reveals that the company has been operating with a mere 3% accountability margin—essentially the slice of revenue that remains after all costs are deducted.

“Excluding Activision Blizzard King, we have poured more than $20 billion into content, platform development, and hardware subsidies over the past five years, yet our annual revenue has slipped by nearly half a billion during that period. This trajectory is unsustainable moving forward,” the memo states.

Such a candid admission on an official Xbox site is unprecedented, and the stark contrast between the hefty investment and the modest revenue decline may shed light on the recent exits of former executives Phil Spencer and Sarah Bond.

Bloomberg reports that Gears of War: E‑Day was initially slated for a PlayStation 5 release, with retailers poised to open pre‑orders this Sunday following the Xbox Showcase. According to Schreier, many Xbox employees were taken aback when the announcement confirmed the title would no longer launch on PlayStation.

The report alleges that a trailer for Halo: Campaign Evolved was slated to debut during Sony’s State of Play event last week, only to be abruptly cancelled by Microsoft. This unexpected pullback could strain the already tense partnership between the two gaming giants.