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Xbox’s layoff wave cuts 268 jobs as Microsoft reshuffles Halo, Forza
Sep 24, 2026
📍 Phliadelphia,PA, USA
# Microsoft Cuts 268 More Xbox Jobs as Gaming Restructuring Continues
Microsoft is cutting another 268 jobs across its Xbox gaming business as the company continues a sweeping restructuring of its gaming operations.
The latest workforce reduction comes just two months after Microsoft announced a much larger round of Xbox layoffs. In July, the company said about 1,600 employees would be affected, while its broader reorganization is expected to impact roughly 3,200 positions by the end of fiscal 2027 in June.
The newest cuts affect employees across several areas of Xbox, including Halo Studios, other first-party development teams and groups responsible for management and central operations within Xbox Game Studios.
The layoffs are part of a wider effort to reorganize Microsoft's gaming operations, with studios being grouped under different structures, reporting relationships changing and some development teams moving outside the Xbox organization.
Mat Booty, Microsoft's chief operating officer, said in a memo published on the Xbox website that changes implemented since July have brought the company approximately 75% of the way through the restructuring announced earlier this year.
The reorganization is also giving several major Xbox studios expanded responsibilities as Microsoft changes how its game-development operations are managed.
Activision is taking on a larger management role within Xbox's game-development structure. It will oversee both World’s Edge and Rare, while a separate Activision team will work on the next Halo title independently of the company's Call of Duty development operation.
Halo Studios itself will operate with a smaller team focused on maintaining existing Halo games and supporting their player communities.
Bethesda is also expanding its responsibilities within Microsoft's gaming organization and will take oversight of Obsidian. Obsidian will continue working on its existing projects, including Grounded, while a new Fallout project being developed with Bethesda Game Studios remains in development.
Microsoft Casual Games is another part of the restructuring and will be placed under King, the Activision-owned studio behind the Candy Crush franchise.
The changes also affect Playground Games and Turn 10, which will be combined into a single team responsible for Microsoft's Forza and Fable franchises.
Several studios have already transitioned out of Microsoft's previous Xbox structure. Compulsion Games and Double Fine Productions returned to management in August, taking their intellectual property, existing game libraries and associated funding with them.
Undead Labs has completed a similar transition. The studio is expected to release State of Decay 3 on Game Pass on its launch day under a new publishing arrangement.
The future of Ninja Theory remains less certain. Booty said two potential deals involving the studio did not move forward, and Xbox plans to consult employees about a possible closure while continuing to evaluate alternatives.
Discussions concerning Arkane are also continuing and are expected to remain ongoing through the end of the year.
Microsoft has described the changes as part of a broader “reset” of its gaming business announced earlier this year. The company has also acknowledged the impact that the restructuring and job reductions are having on employees.
Xbox is expected to provide another update at an all-Xbox town hall scheduled for October 6, where executives are expected to discuss the restructuring and the company's upcoming game lineup.
The latest cuts follow comments made by Xbox CEO Asha Sharma in July about the financial pressures facing the gaming business. At the time, Sharma told employees that the business was not financially healthy and said Xbox's margins were substantially below those of comparable platform and publishing businesses.
The additional 268 job cuts underscore the scale of Microsoft's ongoing effort to reshape Xbox, as the company changes studio responsibilities, management structures and development operations across its gaming portfolio.
Microsoft is cutting another 268 jobs across its Xbox gaming business as the company continues a sweeping restructuring of its gaming operations.
The latest workforce reduction comes just two months after Microsoft announced a much larger round of Xbox layoffs. In July, the company said about 1,600 employees would be affected, while its broader reorganization is expected to impact roughly 3,200 positions by the end of fiscal 2027 in June.
The newest cuts affect employees across several areas of Xbox, including Halo Studios, other first-party development teams and groups responsible for management and central operations within Xbox Game Studios.
The layoffs are part of a wider effort to reorganize Microsoft's gaming operations, with studios being grouped under different structures, reporting relationships changing and some development teams moving outside the Xbox organization.
Mat Booty, Microsoft's chief operating officer, said in a memo published on the Xbox website that changes implemented since July have brought the company approximately 75% of the way through the restructuring announced earlier this year.
The reorganization is also giving several major Xbox studios expanded responsibilities as Microsoft changes how its game-development operations are managed.
Activision is taking on a larger management role within Xbox's game-development structure. It will oversee both World’s Edge and Rare, while a separate Activision team will work on the next Halo title independently of the company's Call of Duty development operation.
Halo Studios itself will operate with a smaller team focused on maintaining existing Halo games and supporting their player communities.
Bethesda is also expanding its responsibilities within Microsoft's gaming organization and will take oversight of Obsidian. Obsidian will continue working on its existing projects, including Grounded, while a new Fallout project being developed with Bethesda Game Studios remains in development.
Microsoft Casual Games is another part of the restructuring and will be placed under King, the Activision-owned studio behind the Candy Crush franchise.
The changes also affect Playground Games and Turn 10, which will be combined into a single team responsible for Microsoft's Forza and Fable franchises.
Several studios have already transitioned out of Microsoft's previous Xbox structure. Compulsion Games and Double Fine Productions returned to management in August, taking their intellectual property, existing game libraries and associated funding with them.
Undead Labs has completed a similar transition. The studio is expected to release State of Decay 3 on Game Pass on its launch day under a new publishing arrangement.
The future of Ninja Theory remains less certain. Booty said two potential deals involving the studio did not move forward, and Xbox plans to consult employees about a possible closure while continuing to evaluate alternatives.
Discussions concerning Arkane are also continuing and are expected to remain ongoing through the end of the year.
Microsoft has described the changes as part of a broader “reset” of its gaming business announced earlier this year. The company has also acknowledged the impact that the restructuring and job reductions are having on employees.
Xbox is expected to provide another update at an all-Xbox town hall scheduled for October 6, where executives are expected to discuss the restructuring and the company's upcoming game lineup.
The latest cuts follow comments made by Xbox CEO Asha Sharma in July about the financial pressures facing the gaming business. At the time, Sharma told employees that the business was not financially healthy and said Xbox's margins were substantially below those of comparable platform and publishing businesses.
The additional 268 job cuts underscore the scale of Microsoft's ongoing effort to reshape Xbox, as the company changes studio responsibilities, management structures and development operations across its gaming portfolio.
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