Xbox has laid off another 268 employees as part of a major reset it commenced in July 2026. At the time, the company said it would becutting 3,200 rolesbefore the end of the fiscal year, starting with 1,600 layoffs across major studios such as Obsidian, Zenimax Online Studios, and id Software.
Now, in a statement shared with Xbox employees (republished on Xbox Wire), division chief content officer Matt Booty has confirmed another 268 workers have been jettisoned from the U.S. conglomerate.
The latest redundancies include workers at Halo Studios, other first-party teams, and the Xbox Game Studios management and central functions layer. Booty said the division is now “roughly three-quarter of the way through [our] previously announced restructuring.”
“I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them,” he added.
In July, Xbox divestedPsychonautsmaker Double Fine andSouth of Midnightdeveloper Compulsion Games. Notably, it confirmed it was in similar talks with Undead Labs, Ninja Theory, and Arkane.
Today, Booty explained Undead Labs has “successfully transitioned” out of Xbox on similar terms to Double Fine, which managed to retain its IP, back catalog, and runway funding.
“Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will releaseState of Decay 3day one on Game Pass,” said Booty.
Ninja Theory, however, is facing closure after two separate agreements for the Senua developer collapsed. “We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward,” Booty continued, before noting that Xbox remains in a lengthy consultation with Arkane.
Xbox is also moving to merge a number of internal studios in a bid to shrink its operating footprint and focus its publishing efforts.
As a result, Call of Duty maker Activision—acquired by Xbox in 2023 for almost $70 billion—is expanding its remit and is now developing the next Halo title led by a “new, purpose-built team.” A small Halo Studios contingent will continue supporting Halo products in-market. Internal Xbox studios Rare and World‘s Edge have also been moved under the Activision umbrella.
Bethesda will now house Obsidian, which will continue working on current projects such as Grounded and an upcoming Fallout title made in collaboration with Bethesda Game Studios.
King will expand to include Microsoft Casual Games. Booty claimed that move will unite “two global leaders” in casual game design and live operations.
Finally, Fable developer Playground Games and Forza custodian Turn 10 will be merged into a single studio focused on those two franchises. “These two studios have been creative and franchise partners for over a decade, and today’s changes will formally move their work into one team,” added Booty.
An email sent to Blizzard employees by a senior leader (viewed by Game Developer) indicates the World of Warcraft maker is not impacted by “today’s announcements.” Although, that careful phrasing doesn’t rule out cuts in the future. An Xbox representative has confirmed the legitimacy of that email.
In July,Xbox workers told Game Developerthat Microsoft’s decision to make five rounds of mass layoffs in just three years will hamstring a number of internal studios due to a cataclysmic loss of talent. Those impacted by the cuts also accused the company of failing to treat employees with dignity and respect.
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