Xbox has made 5 rounds of mass layoffs since buying Activision Blizzard for $68.7 billion October 2023—however evidently Microsoft CEO Satya Nadella feels that is merely all a part of a pure “streamlining” course of.
The most recent cuts had been confirmed in July 2026 and can lead to 3,200 individuals being jettisoned from Xbox Sport Studios by the top of the present fiscal yr. That discount contains the divestment of notable studios resembling Compulsion Video games, Double Effective, and Undead Labs. Others like Arkane and Ninja Concept are additionally going through the very actual risk of closure.
In 2025, Microsoft made an undisclosed variety of cuts throughout Xbox, concentrating on subsidiaries resembling ZeniMax On-line Studios and King. Previous to that, the corporate laid off 2,550 employees throughout two separate rounds of layoffs in January 2024 and September 2024. Arkane Austin, Tango Gameworks and Alpha Canine Video games had been additionally shuttered in Might 2024, resulting in further job losses.
The total scale of Microsoft’s post-merger reckoning stays unclear, however we all know the U.S. conglomerate has—on the very least—handed 5,750 employees their marching orders since October 2023.
In accordance with Nadella, these years of tumult are merely a vital evil. Talking on the newest episode of the Sources Podcast (by way of Kotaku), Nadella mentioned he feels “unbelievable” in regards to the franchises presently nestled inside Xbox Sport Studios. He additionally mentioned it has been “nice” to look at the “streamlining” taking place beneath new Xbox boss Asha Sharma, who changed earlier overseer Phil Spencer in February 2026.
“I really feel unbelievable in regards to the IP we’ve proper now. If I take a look at the studios, the IP portfolio we’ve, and our means to then take that and produce nice video games going ahead, I really feel unbelievable,” mentioned Nadella.
“There’s some quantity of streamlining the staff is doing, and Asha is doing, which is nice to see, after which we’ve to invent the correct sustainable enterprise mannequin that permits us to ship gaming to an increasing number of individuals. That has at all times been the aim, which is, we need to be an amazing writer and an amazing platform supplier for video games throughout each PCs and Xboxes.”
Nadella mentioned Sharma has knowledgeable him that Xbox will obtain “progress” through the subsequent fiscal yr whereas additionally “producing some nice video games.”
That is regardless of Xbox {hardware} (which is hardly setting the world alight for the time being) turning into more and more unaffordable on account of a part disaster brought on by rampant funding in AI datacenters by the hands of corporations like Microsoft itself.
It is also essential to contemplate that a lot of Microsoft’s remaining inside studios will now be tasked with revitalising the core franchises Xbox is hanging its future on whereas coping with debilitating mind drain and uncertainty by the hands of their employer.
Talking to Sport Developer earlier this yr, a number of Xbox employees impacted by the newest spherical of cuts appeared uncertain how studios may presumably bounce again after shedding a lot senior expertise and being compelled to discover a ‘new regular’ whereas the specter of much more layoffs hanging overhead.
“Triple-A recreation improvement is so collaborative and so interconnected [around] specialists that [laying off so many people] is like having a large piece of material and taking out half the threads,” one individual advised Sport Developer.
“Your complete factor goes to crumble as a result of we rely so intently on one another, and you may’t simply rip out a 3rd or nearly half of of your implementers—your direct implementers—and anticipate to have the identical stage of content material. Not even shut.”
