A new report claims that a second wave of layoffs is going to hit Xbox sometime this week. Along with layoffs that will reportedly affect “hundreds” of Xbox employees, this week could also see many Microsoft-owned studios merging with one another in an attempt to reduce their footprint.
Xbox has had a very busy 2026, and not at all for the right reasons. February saw Phil Spencer and Sarah Bond leaving Xbox and saw Asha Sharma step up as Xbox’s new CEO. Then, after months of speculation, Sharma officially announced in July that a total of 3,200 Xbox employees would lose their jobs by the end of fiscal year 2027. 1,600 Xbox employees were laid off on the same day, resulting in major shake-ups across the company. Four studios were also forced to part ways with Xbox, with Double Fine and Compulsion Games returning to independent development while Ninja Theory and Undead Labs entered new contracts with new owners.
Another Wave of Xbox Layoffs is Imminent
In a new report from The Information (via Insider Gaming), it’s claimed that a second wave of layoffs is going to hit Xbox sometime this week, and that it will affect “hundreds” of employees. The Information claims to have learned this from “someone briefed on [Xbox’s] plans,” and also mentions that the company is planning to consolidate some of its owned studios, which essentially means merging studios under one shared banner. This report does not specify which Xbox-owned studios will be affected by this rumored round of layoffs and consolidation.
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In a ResetEra thread discussing The Information’s report, well-known leaker NateTheHate corroborated these claims. NateTheHate specifically stated that Halo will be consolidated under Activision-Blizzard alongside other unnamed studios. Some studios will also be merged together within Xbox, though NateTheHate doesn’t provide any names. When asked if 343 Industries (now known as Halo Studios) will continue work on the Halo franchise or be moved onto a different IP, NateTheHate replied that they “don’t know the fate of Halo Studios.”
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Of course, all rumors should always be taken with a big pinch of salt. While it’s a guarantee that at least another 1,600 Xbox employees will lose their jobs by the end of fiscal year 2027, the full scope of Xbox’s future plans haven’t yet been officially announced.
In Asha Sharma’s official statement announcing the mass Xbox layoffs on July 6, the Xbox CEO talked about the need to “reset” Xbox as a brand and company. This need is said to stem from the lack of growth seen in investments like Xbox Game Pass and a multi-platform approach, which ultimately led to “margins that are 3-10x lower than comparable platform and publishing businesses,” according to Sharma. It seems that this “reset” is now in full swing.