Microsoft is cutting 268 roles across Xbox, the company announced on Tuesday, in the latest phase of a restructuring of its gaming division. The layoffs affect Halo Studios, other first-party studios, and the XGS management and central functions layer, according to Xbox chief content officer Matt Booty. The cuts follow 1,600 Xbox positions that were eliminated in July, a move Xbox CEO Asha Sharma called the most significant restructure in Xbox history.
Booty said in a memo that the actions taken since July, including studio divestitures, have brought the company roughly three-quarters of the way through the restructuring it previously announced. The reductions are part of 3,200 roles Microsoft has confirmed will be affected during its 2027 financial year, which ends in June 2027. Booty said he is grateful for what departing colleagues have built and acknowledged how difficult the day would be for those leaving and the teams around them.
The restructuring includes the sale of four Xbox studios. Two of them, Double Fine and Compulsion Games, have already become independent. Plans to sell Ninja Theory have collapsed after two separate agreements fell through, and Microsoft will now begin a consultation period with employees on a proposed closure while it continues to look for other options. The sale of Undead Labs is still moving forward, and Booty said the studio has successfully transitioned on terms similar to those of Compulsion and Double Fine.
Discussions about the future of Arkane and the Blade game are ongoing under French labor law. Booty said consultation with Arkane remains underway and is expected to continue through the end of the year. The company has not announced a final decision on that studio.
Tuesday's layoffs come alongside a broader reorganization of Xbox. Activision is taking on the Halo franchise, along with Sea of Thieves and World's Edge, the studio behind Age of Empires. The changes mark the latest shake-up for Microsoft's gaming business, which has now been through two rounds of job cuts in a matter of months. The moves affect studios and workers in the United States and abroad, including teams covered by French consultation rules.
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