Xbox Reportedly Preparing Second Wave of Layoffs This Week, Consolidating Multiple Studios
By CriticalPixel ·
Xbox is bracing for another gut punch. Eurogamer reports that Microsoft's gaming division is preparing to lay off hundreds more employees this week while folding several of its game studios into each other. It has been barely two months since the company's first big round of cuts, and the ink was still fresh on interviews where Xbox leadership framed that restructuring as a one time reset. Instead, workers are staring down a second wave that could reshape the roster of studios still standing under the Xbox banner.
What The Report Says
The news traces back to an exclusive report cited by outlets across the industry this morning. Per that reporting, hundreds of jobs are on the line, and the cuts will apparently touch multiple internal teams rather than a single studio. GamesIndustry.biz adds detail beyond the initial story, noting that the restructuring may involve mergers or internal changes spanning Xbox Game Studios, Bethesda, Activision, and Blizzard. Nobody at Microsoft has confirmed a number publicly yet, and the exact studios have not been named, which has left the community guessing and bracing at the same time.
A Second Wave Just Months After The First
This would be round two of a restructuring plan that Xbox CEO Asha Sharma set in motion back in July, when the company cut 1,600 jobs as part of a stated goal to eliminate roughly 3,200 positions before next summer. That first wave hit almost every corner of the Xbox portfolio, with Bethesda, Id Software, and Zenimax Online Studios absorbing some of the heaviest losses. Xbox also shed entire studios outright that same month. Compulsion Games and Double Fine Productions bought back their independence, Ninja Theory and Undead Labs were sold off to buyers Microsoft has not named, and Dishonored studio Arkane Lyon has been stuck in a consultation process with its future still unresolved months later. If this new report holds up, the math on Sharma's 3,200 job target starts to look uncomfortably close to complete.
Which Studios Are On The Chopping Block
According to VGC, whose reporting GamesIndustry.biz cited directly, the consolidation could reach into Xbox Game Studios proper along with Bethesda, Activision, and Blizzard, though nothing has been finalized publicly. Sharma has been open about wanting fewer management layers, saying some teams had grown as many as fourteen layers deep and that platform teams ballooned by 40 percent since the start of this console generation while playtime and audience numbers slid the other direction. That is the corporate logic behind consolidation: fewer standalone studios, flatter reporting lines, and presumably lower overhead. For the people actually making the games, it means another round of uncertainty about whether their team survives the reshuffle.
How Fans And Developers Are Reacting
Reaction across gaming social media has skewed sharply negative and cynical. Posts about the report picked up traction within hours of publication, several tagging Microsoft with a mocking nickname and pointing out that a division promising growth keeps shrinking its own workforce to get there. Developers who lived through July's cuts describe morale as already low, and the prospect of a second wave landing this week has only added to the anxiety rather than resolving it. Because Microsoft has not confirmed which teams are affected, speculation has filled the gap, with names like Blizzard and Halo Studios circulating among fans trying to guess who gets hit next. None of that speculation is confirmed, and it is worth treating it as unconfirmed chatter until Microsoft or the affected studios say otherwise.
The CriticalPixel Take
Sharma's messaging leans hard on words like reset and growth, but two rounds of layoffs in three months tell a blunter story. Xbox spent years buying up studios and expanding aggressively, and now it is paying that back on the backs of the people who never made the acquisition decisions in the first place. Cutting management layers is a defensible goal on paper. Doing it twice inside a single fiscal year, right after telling your remaining staff the worst was behind them, is how you guarantee your best people update their resumes the moment they see the word consolidation in a headline. Xbox does not need another studio shut quietly through a memo. It needs a restructuring plan that does not require restructuring the restructuring plan four months later.
What Happens Next
If the report is accurate, Microsoft is expected to make things official as early as this week, which would confirm whether the cuts land closer to Sharma's original 3,200 target or push past it. Watch for statements from Xbox Game Studios, Bethesda, and Blizzard specifically, since those are the names being floated most often around the consolidation talk. Until Microsoft speaks on the record, everything beyond the core report of hundreds of jobs and multiple studios being folded together remains unconfirmed, and CriticalPixel will update this story once official numbers or studio names land.
Sources
Eurogamer report on Xbox second wave of cuts and studio consolidation
Eurogamer post on X announcing the layoffs report
GamesIndustry.biz report on Xbox layoffs and studio consolidation