Xbox plans hundreds more layoffs and studio consolidation
- The cuts follow 1,600 Xbox layoffs announced in July.
- Asha Sharma is seeking to improve Xbox’s margins while focusing development on major franchises.
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Xbox is reportedly planning to lay off hundreds of employees this week as part of a second major staff reduction in 2026.
As reported by The Information, which cited a source briefed on Microsoft’s plans, the company may also consolidate several of its game studios.
The latest cuts come as Xbox CEO Asha Sharma seeks to reset the business and improve its profit margins.
Sharma has also pushed the company to focus more on major franchises including The Elder Scrolls and Fallout while reducing its smaller acquired studios.
Second wave
Microsoft cut 1,600 Xbox jobs in July and had previously told staff it planned to eliminate another 1,600 roles by the end of its business year. The company has not confirmed the remaining cuts.
The restructuring also follows Xbox’s decision to sell four studio subsidiaries in July. Compulsion Games and Double Fine Productions have since returned to independent ownership, while Ninja Theory and Undead Labs have entered terms to join new ownership.
Xbox’s July cuts included hundreds of jobs at ZeniMax Online and around 100 at id Software. They follow Microsoft’s 9,000 job cuts last year, which affected Xbox heavily, as well as 1,900 cuts across Activision Blizzard, Bethesda and Xbox in 2024.
Earlier this year, Xbox revealed plans to introduce new cloud gaming limits to Xbox Game Pass in November, with the changes set to affect how subscribers access cloud gaming through the service.
