Xbox Cuts 268 More Jobs as Major Gaming Restructure Continues

Microsoft is eliminating another 268 positions across its Xbox gaming business as the company continues the large-scale restructuring announced earlier this year.

The latest cuts affect Halo Studios, other first-party developers, and Xbox Game Studios management and central functions. Microsoft says the changes completed since July, including studio divestitures, have taken it roughly three-quarters of the way through the restructuring announced earlier this year.

Microsoft has not provided a breakdown showing how many of the 268 positions are being removed from each studio or department.

Microsoft announced in July that it planned to eliminate approximately 3,200 Xbox roles throughout FY27 as part of what it described as the biggest restructuring in the division's history.

Around 1,600 positions were cut when that plan was first announced, with additional reductions planned over the remainder of the financial year. The company said at the time that the changes would affect Activision, Bethesda and ZeniMax, Blizzard, King, Mojang, Xbox Game Studios, and other parts of the organization.

The new 268-role reduction falls within that existing plan rather than representing a separate workforce target.

Microsoft said in July that the restructuring was intended to simplify management, reduce organizational complexity, and focus investment on higher-priority projects. The company also began moving several studios outside Xbox ownership as part of the same process.

The restructuring has also moved Ninja Theory closer to a possible closure after two attempts to transfer the studio to new ownership fell through. Microsoft says it will now begin consultation with employees over a proposed closure while continuing to explore other possible paths for the developer.

Other studio divestitures have progressed further. Compulsion Games and Double Fine returned to their management teams in August with their intellectual property, back catalogs, and runway funding. Undead Labs has now completed a similar transition and will release State of Decay 3 through a new publisher, with the game still planned to launch day one on Game Pass.

Consultation over Arkane's future is still ongoing and is expected to continue through the end of 2026.

The layoffs arrive alongside wider changes to Xbox's studio structure. Activision is expanding its oversight to Rare and World's Edge while taking responsibility for the next Halo game, Bethesda is adding Obsidian, King is taking responsibility for Microsoft Casual Games, and Playground Games and Turn 10 are being combined into one studio focused on Forza and Fable.

Microsoft says the changes are intended to reduce the number of separate business units and place teams that already work closely together under the same leadership.