Rumor: Xbox Plans Three More Rounds of Layoffs

Microsoft plans three more rounds of layoffs in its Xbox gaming division, in October, November, and January, according to Fortune, which cites sources familiar with the situation. The company has already cut 1,868 employees since it announced a large-scale restructuring in July 2026.

The restructuring has already had serious consequences for Microsoft’s internal game teams and for its relationships with well-known developers.

Microsoft no longer owns several studios, including Double Fine, Ninja Theory, Arkane Studios, Compulsion Games, and Undead Labs. According to Polygon, Ninja Theory and Arkane were at risk of closure. Double Fine, Compulsion Games, and Undead Labs regained their independence after internal cuts.

The studios that remain within Microsoft have also faced organizational changes. Development of the Halo series was handed to Activision, best known for Call of Duty. Halo Studios, according to reports, may shift to a mostly supporting role.

Obsidian Entertainment was moved under Bethesda’s leadership. The studio, known for Fallout: New Vegas and The Outer Worlds, is now working on a new game set in the Fallout universe.

The cuts also hit id Software, the creators of Doom. According to reports, the smaller team could limit the studio’s ability to make projects on the scale of Doom: The Dark Ages.