Earlier today, we reported that XBOX layoffs and studio consolidation were imminent. Now, we’re here to say that the news has broken and the layoffs are official. In a new blog post from the team at XBOX, pioneered by Matt Booty, it was confirmed that 268 employees will be laid off in the next step of the monumental reset.
This follows the 1,600-strong round of layoffs that hit XBOX earlier this year, which was deemed the first of two waves of redundancies. The earlier batch, dubbed the ‘Big Reset’, saw four XBOX studios sold, eight percent of all employees cut, and some projects cancelled.
XBOX’s 2026 Layoffs Hit The Second Wave
In a blog post, the XBOX team wrote:
We are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer. The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring. I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them.
In July, CEO Asha Sharma effectively laid waste to a lot of XBOX’s good graces by publishing a memo talking about thousands of layoffs. She talked about this being the ‘most significant restructure in XBOX history,’ a concept that has persisted months later with this second wave hitting.
Sharma wrote:
I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.
Following the revelation, Compulsion, Double Fine, Ninja Theory, and Undead Labs all prepared to part ways with XBOX. Things have balanced out relatively well since then, but this second wave is just as disruptive, introducing a string of consolidations that have pulled some studios under the banners of others.
The consolidation effort will bring Halo under Activision’s remit going forward, with a small Halo Studios contingent staying to support the Halo community. Also, Activision will now manage Rare going forward.
Bethesda will assume control of Obsidian, King will take over Microsoft Casual Games, and finally, Playground and Turn 10 will unite as one studio to work together on Forza and Fable.
Are you shocked by today’s XBOX news? Let us know your thoughts on the Insider Gaming Discord server.
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Grant has been gaming for 30+ years and in the industry for 10+. You'll probably find him playing a post-apocalyptic game or an extraction shooter somewhere.
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