Xbox is reportedly preparing to lay off hundreds of employees this week in its second major reduction this year. The Microsoft-owned gaming business is also expected to merge multiple game studios. The report, however, did not say which studios are involved. The newest report follows stringent cuts across Xbox in July, when Microsoft eliminated around 1,600 positions. Sharma also said another 1,600 roles would be cut, a plan widely read as running through fiscal 2027. The information has also sparked discussions among the gaming realm about the industry’s recurrent hiring and layoff loops.
Why Is Xbox Reportedly Planning Another Round Of Layoffs?
Xbox has plans to eliminate numerous jobs this week while merging several of its game studios. The report does not provide details about which studios could be consolidated or moved within Microsoft’s publishing structure. This leaves the accurate impact on individual development teams uncertain. The consolidation could involve Microsoft’s broader publishing groups, including Xbox Game Studios, Bethesda, Activision, and Blizzard. The newest development comes only months after Microsoft’s major reduction across its gaming niche. In July, Xbox removed 1,600 roles and divested five studios, while Microsoft said another 1,600 positions will be eliminated by the end of 2027.
The first wave included hundreds of job losses at ZeniMax Online and around 100 cuts at id Software link back to the earlier prediction that Xbox layoffs may continue. Blizzard was largely unaffected by the July layoffs. However, Bloomberg reporter Jason Schreier said on the 8-4 Play podcast that layoffs at Blizzard Entertainment are now forthcoming. The development follows the studio’s recent declaration involving StarCraft, Diablo V, and World of Warcraft Forever.
Other reporting discussions have also pointed towards potential changes at Halo Studios. Jez Corden of Windows Central and ResetEra leaker NateTheHate have suggested that significant changes could be coming for the studio. It does not entirely establish that Halo Studios will be part of the newest cuts. The restructuring is taking place under Asha Sharma, who replaced Phil Spencer as CEO in February and has said she wants to return Xbox to growth. At the Bloomberg Tech conference this summer, Sharma said she wanted to reset the business because it was not in a competitive spot.
Which Xbox Studios Could Be Hit By The Latest Consolidation?
Xbox has already cut ties with several studios during the reshaping. Compulsion Games and Double Fine Productions have returned to becoming fully independent studios, while Ninja Theory and Undead Labs have reportedly ended terms to join new ownership. The newest cuts would also follow Microsoft’s broader 9,000 job reduction last summer, which affected Xbox.
Several projects were also canceled, including the planned Perfect Dark reboot and Rare’s Everwild. Microsoft also made deep cuts across Activision Blizzard, Bethesda and Xbox in 2023 and 2024, including 1,900 positions in the first round.
How Xbox Layoffs Under Asha Sharma Compare To 2024 And 2025
Another probability of layoffs has garnered Reddit users to discuss the wider employment situation in the gaming niche. One reddit user mikelmann999, questioned about the dire gap between supply and demand for game developers. It is noted how arduous it has been to remember a prolonged period without another large wave of layoffs.
Another user, meatballranger, pointed the pattern to the niche’s swift expansion during the COVID-19 period, where gaming companies did undergo massive hiring sprees. A separate commenter, Matthewmspace, pointed to similar patterns across the wider industry, arguing that organizations have expanded around expectations that pandemic-era remote work concepts would continue at the same scale. Other reactions focused on how firms approach profitability and workforce planning.
QuoteGiver argued that executives may continue maximizing profits during different economic periods rather than making short-term mistakes. MyKneesAshy criticized what they described as a tendency to overestimate the long-term value of business decisions. Not every Reddit reaction focused on corporate management. One commentator suggested that gaming remains relatively resilient because a $60 or a $70 game can provide many hours of entertainment compared with other forms of discretionary spending. These comments represent individual Reddit users rather than an established explanation for Microsoft decisions.
The information does not identify the specific financial or operational reason behind the newly reported Xbox cut beyond the restructuring effort. For Xbox, the question is which studios and teams will be affected by the consolidation. Microsoft does not publicly confirm the specific hundreds of additional layoffs, meaning the final scope of the restructuring remains uncertain. If confirmed, the latest reduction would represent another major change for Xbox only months after its prior round of layoffs and studio changes. The broader gaming industry’s repeated cycles of expansion followed by workforce reductions are a major concern for developers as companies adjust their project pipelines.
