More layoffs at Microsoft Xbox, hundreds of employees impacted in fresh round

Microsoft's gaming division, Xbox, has announced a new round of layoffs that impacts 268 employees. This decision comes just a few months after Xbox laid off 1,600 workers as part of a wider restructuring within Microsoft.

In Short

• Xbox lays off 268 more employees
• Xbox exec Matt Booty says this complete three-quarters of planned restructuring
• Xbox also merges gaming studios

Ever since Microsoft appointed Asha Sharma as Xbox CEO earlier this year, the gaming division of the tech giant has made some big changes. Asha Sharma had announced an “Xbox reset” with the aim of making the division more profitable. Amidst such changes, Xbox has announced a second round of layoffs within a few months.

In an announcement on the Xbox website, the company shared a memo from Xbox’s chief operating officer Matt Booty under the title, “Continuing the reset.” Xbox confirmed that this layoff round impacts 268 roles across the division. The latest cuts follow the 1,600 Xbox layoffs announced in July and form part of the 3,200 roles Microsoft had already said would be affected during its 2027 financial year, which ends in June 2027.

In the memo sent to Xbox employees, Matt Booty stated that the affected roles were across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer. “The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” he added.

Matt Booty urged employees to support "those affected and treat one another with care and respect." Xbox will also be hosting a town hall soon. "At our October 6 town hall, we will come together as an ALL-XBOX team to reflect on our progress and look ahead to one of the strongest game lineups in our history," he added.

Before the layoff round in July, Xbox was said to have roughly 16,000 workers globally. "Our business today is not healthy,” Asha Sharma told employees in July. As per the Xbox CEO, the division’s margins were "3–10 times lower than comparable platform and publishing businesses.”

Xbox is restructuring its gaming studios

The layoffs were part of wider changes within Xbox, including changes within gaming studios under the division. “The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise,” Matt Booty added.

As part of the changes, Activision – the maker of Call of Duty – will take on World’s Edge and Rare, and will also develop the next Halo title through a new team. "A small team at Halo Studios will continue supporting the Halo community and games in-market," he wrote.

On the other hand, the gaming studio Obsidian will be merged into Bethesda – the maker of Starfield. Though Xbox confirmed that Obsidian’s projects including Grounded will remain on track, as well as a new Fallout project being made with Bethesda Game Studios. Candy Crush maker King will now include Microsoft Casual Games. Playground Games and Turn 10 will be brought together as one studio focused on the Forza and Fable franchises.

Previously, Xbox had confirmed that it was spinning off five gaming studios, including Compulsion Games and Double Fine Productions.

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