Microsoft’s Xbox business is going through another round of job cuts, with 268 positions being eliminated as the company continues to reorganize its gaming operations.
The latest layoffs come only two months after Microsoft announced a much larger reduction across Xbox. Microsoft had already announced a major workforce reduction in July, when it said 1,600 Xbox employees would lose their jobs. The company expects its wider reorganization to impact roughly 3,200 positions by the end of fiscal 2027 in June.
The newest cuts involve employees across several parts of Xbox, including Halo Studios, other first-party game studios, and teams handling management and central operations at Xbox Game Studios.
The repeated layoffs are happening alongside a broader reshaping of Microsoft’s gaming business. Studios are being grouped differently, reporting lines are changing and some development teams are moving outside the Xbox organization.
Mat Booty, Microsoft’s Chief Operating Officer, said in a memo published on the Xbox website that the changes made since July have brought the company about 75% of the way through the restructuring announced earlier this year.
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Several well-known Xbox studios are also getting new responsibilities.
As part of the studio reshuffle, Microsoft is giving Activision a larger role in managing some of Xbox’s game development. The company will oversee both World’s Edge and Rare, while a separate team under Activision will handle the upcoming Halo title without being part of its Call of Duty development operation.
Halo Studios will retain a smaller team focused on supporting the existing Halo games and its player community.
Bethesda is expanding its role within Microsoft’s gaming business and will also oversee Obsidian. Obsidian will continue developing its existing games, including Grounded. A new Fallout title being developed with Bethesda Game Studios is also moving forward.
Microsoft Casual Games will come under King, the studio best known for the Candy Crush franchise.
Another major change involves Playground Games and Turn 10. The two studios will be brought together as one team focused on Microsoft’s Forza and Fable franchises.
The restructuring is also changing the future of several studios that have been part of Xbox.
Compulsion Games and Double Fine Productions moved back to management in August, taking their intellectual property, existing game catalogues and funding with them.
Undead Labs has also completed a similar transition. The studio is expected to launch State of Decay 3 on Game Pass on its release day under a new publisher.
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Ninja Theory faces a more uncertain future. Booty said two separate deals involving the studio did not go ahead. Xbox plans to consult employees about a possible closure while continuing to consider other options.
Discussions around Arkane are still taking place and are expected to continue until the end of the year.
Microsoft says the changes are part of the wider “reset” announced earlier this year. The company has also acknowledged the effect of the restructuring and layoffs on its employees.
Xbox is expected to provide another update during an all-Xbox town hall scheduled for October 6. The meeting is expected to cover the progress of the restructuring as well as upcoming games.
The latest cuts follow comments from Xbox CEO Asha Sharma in July about the financial challenges facing the gaming business.
“Our business today is not healthy,” Sharma told employees at the time.
She also said Xbox’s margins were “3–10 times lower than comparable platform and publishing businesses.”
The latest 268 job cuts add another chapter to Microsoft’s ongoing effort to change how Xbox is structured, managed and operated as the company continues to reassess its gaming business.