Xbox Layoffs Continue As Multiple Studios Merge

Published Sep 22, 2026, 9:37 AM EDT

Chris is a Gaming Editor at ScreenRant. He has been a professional writer since 2009, and has written for top TV, comics, movie, and video game outlets like Engadget, Polygon, Destructoid, and more. He brings with him an expertise in every game genre, no matter how niche or mainstream.

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The gaming industry has had a rough year. Sony announced it would abandon physical discs in the near future. Xbox laid off a ton of people and consolidated or sold off studios. Now, more could be on the horizon, amid a pretty big business deal by Xbox.

While Microsoft did end up getting a win through acquiring Hideo Kojima's Physint, there are looming layoffs coming. The Xbox team warned folks that more rounds of layoffs would hit later in 2026, and now, thanks to chatter on X, we might have a sense of what they could include, and when they'll be rolling out.

According to a report from The Verge, Microsoft is "due to announce another round of Xbox layoffs today." It's going to be a "larger restructuring," apparently, including consolidating studios. Typically, this means combining teams, potentially eliminating entire studios altogether, or putting them in "support roles." This is a classic Activision strategy: taking former action/adventure game developers and tasking them with creating Call of Duty maps.

"100s" of people will be affected by the restructuring this week, and 3,200 layoffs are planned in total "by the end of June 2027." This is one of the most stressful ways to roll out that plan, as people will wonder for months where they'll end up, even if they keep their roles.

Based on information from insider NateTheHate, Halo is scheduled to move under ABK (Activision Blizzard King), and "other studios will move to different companies" within the Xbox and Microsoft brands. More than just Halo could move to ABK. None of this is confirmed, so take it with a grain of salt.

Anything could happen with these restructuring efforts. Microsoft could aim to saturate some brands, and by putting them under the general "Xbox" umbrella, it could make it look like one massive entity. There are also huge brands that operate alongside Xbox (including Activision-Blizzard) that are likely safe.

As a reminder, here is the main part of the memo Xbox CEO Asha Sharma sent earlier this year: "We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management. I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale."

In the best cases, some studios, like Double Fine, have gone independent again and are doing their own thing outside Xbox. Ideally, that happens as much as possible this time around.

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