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.
More from Grant Taylor-Hill
Damnnnn Some big ass moves!! I honestly really like the sound of most of this though!! Halo being under Activision is such a good move! Get some competent leadership that knows how to manage studios that put out Call of Duty… that kind of leadership should beable to get Halo Studios to get passed there milestones much smoother and hopefully more frequently on time! I really like that move.
The Turn 10 and PlayGround coming together… honestly that felt like that happened last year when Turn 10 got gutted.
For a second I thought I read that Obsidian was going to be going over to Activision too, and that had me very thrown off, like why wouldnt they be going under Bethesda… Then double checking, n they are going to be under Bethesda! That is awesome! Now Todd Howard can micromanage that next Fall Out game a bit closer LoL jk, But I bet it will actually be good things for that Fall Out game honestly.
Hearing Rare go to Activision is the 9only one that doesn’t just flat out make sense to me at first hearing of all this,…. But Rare NEEDED to do something! When Everwild fell through, that really F’d that studio it feels like. They have been living off of Sea Of Thieves for far too long now, I get its a GaaS game but they have a really big studio… The studio tour video is amazing btw if you never seen it. But yeah they need to get some new direction ASAP. They should have there own Fable like game similar tyo PlayGround to work on and make a master piece, they have the talent 100%,. They just need a new project to inspire the staff there. Fable really has turned Playground into one of the top studios in the industry… Between having the time and budget they have gotten to really put their all into that game as well as all of the success they have had with Forza