Xbox is reportedly preparing to lay off hundreds more employees this week as Microsoft plans to consolidate several of its studios, marking what could be the second wave of job cuts for the gaming division this year. The report, sourced exclusively from The Information, cites a source briefed on Microsoft’s internal plans but does not disclose which specific studios are affected or which are being merged. If the layoffs materialize, they would follow the major restructuring announced in July that already resulted in 1,600 job cuts across the company.
The reported moves are part of Xbox CEO Asha Sharma’s broader strategy to “reset” Microsoft’s gaming division and return it to profitability. When the initial cuts were announced, Sharma indicated the company intended to eliminate a further 1,600 jobs before the end of the year, potentially landing next summer. These newly reported layoffs could well be that second wave, though the report leaves the specifics deliberately vague.
A Year of Restructuring
The July layoffs saw cuts spread across almost the entirety of Xbox’s studio portfolio, though the impact was uneven across teams. Alongside the job losses, Xbox shed a handful of studios outright, with some of those, such as Double Fine Productions and Compulsion Games, buying back their independence. Other studios, such as Ninja Theory and State of Decay maker Undead Labs, were instead sold to as-yet unnamed buyers, while Dishonored studio Arkane Lyon is undergoing consultation, with its ultimate fate remaining unknown.
Sharma’s plan is for Xbox to concentrate its efforts on making games in its biggest franchises, such as The Elder Scrolls and Fallout. But the cuts impacted Fallout and Elder Scrolls maker Bethesda too, as did Elder Scrolls Online developer Zenimax Online. Doom and Quake maker id Software was also heavily impacted by the restructuring.
“We’re going to focus on the things that matter most to our players and the franchises that define who we are.”
Xbox CEO Asha Sharma
As a result, morale was reportedly low at Xbox following July’s cuts, and it is unlikely to improve this week should the layoffs occur. The combination of shrinking headcount, studio consolidation, and uncertainty over the future of several beloved teams has left the community anxious about what the next wave means for the studios and the games they are known for.
Looking Ahead
While the report does not confirm the layoffs or reveal the studios involved, the timing suggests Microsoft is moving quickly to execute its profitability plan. If the cuts proceed as described, they would extend a year of significant change for Xbox, with the company continuing to trim its portfolio in favor of its flagship franchises.
Players and industry observers will be watching closely for any official confirmation from Microsoft, as well as updates on the studios currently in limbo. For now, the reported second wave stands as a stark reminder of the scale of restructuring facing Xbox, and the ongoing effort to reshape the division around its most valuable properties.
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