Xbox Reportedly Plans More Layoffs and Studio Consolidation

Xbox is reportedly preparing to cut hundreds of jobs this week while consolidating several game studios, according to The Information. The move continues Xbox CEO Asha Sharma’s restructuring of Microsoft’s gaming business.

The reported cuts follow Xbox’s July 2026 workforce reduction, when Sharma told employees that 1.6K roles had been eliminated and another 1.6K would be cut by the end of the year.

Four Xbox-owned studios were also moved toward new ownership at the time.

How Has Xbox’s Restructuring Affected its Studios?

The latest restructuring is apparently aimed at improving Xbox’s profit margins and shifting resources toward major franchises such as The Elder Scrolls and Fallout. The planned studio consolidation could involve teams across Bethesda, Xbox Game Studios, Activision, and Blizzard.

Sharma previously stated that Xbox needed to “reset” its business, describing it as “not in a healthy spot.” The July cuts included hundreds of positions at ZeniMax Online and around 100 at id Software, while Blizzard was largely unaffected.

Compulsion Games and Double Fine Productions have since moved toward independence, while Ninja Theory and Undead Labs have entered into terms for new ownership.

The changes follow Microsoft’s 9K job cuts in 2025, which heavily affected Xbox and coincided with cancellations including Perfect Dark and Everwild. Microsoft had also eliminated 1.9K gaming jobs across Bethesda, Activision Blizzard, and Xbox in 2024.

Some previous reports also suggest that Microsoft CEO, Satya Nadella, and CFO, Amy Hood, discussed restructuring or spinning out Xbox. They have since supported Sharma’s overhaul.

The latest move would further reduce Xbox’s studio footprint as Microsoft concentrates its gaming business around established franchises and fewer development teams.