Xbox has cut 268 more jobs across Halo Studios, other first-party teams, and its central management layer. It is the latest round of Xbox layoffs since a broader downsizing plan started in June.
Matt Booty, Xbox’s executive vice president and chief content officer, said the cuts put Microsoft’s gaming division “roughly three-quarters of the way” through a planned 3,200 job reduction for the year.
The June round eliminated 1,600 positions. Combined with this week’s cuts, Xbox has removed close to 1,900 jobs since the current restructuring began.
Xbox chief executive Asha Sharma took over the division earlier this year with a mandate to simplify its management structure. The new layoffs arrive alongside a wave of studio mergers that change who makes some of Xbox’s biggest franchises.
What the latest Xbox layoffs affect
Booty said the 268 cuts span Halo Studios, unnamed other first-party teams, and what he called the “XGS management and central functions layer.” That phrase refers to the administrative structure sitting above Xbox Game Studios. The company has not specified which teams within Halo Studios lost staff. However, the cuts land as Halo’s development itself changes hands.
Booty framed the 268 figure as a milestone toward the 3,200-job target, not an end point. That leaves open the possibility of further reductions before the year is out.
A pattern dating back to the Activision Blizzard deal
Xbox’s job cuts did not start this year. In January 2024, Microsoft eliminated roughly 1,900 positions across Activision Blizzard, Xbox, and ZeniMax as it absorbed the studios from its $69 billion Activision Blizzard acquisition. That September, Microsoft closed Tango Gameworks and Arkane Austin outright. It also shut down Alpha Dog Games and folded Roundhouse Studios into ZeniMax Online Studios.
Sharma’s “reset,” announced earlier this year, is the third distinct wave of cuts since the Activision Blizzard deal closed. The 268 layoffs announced this week extend that pattern further, and Booty’s own framing suggests it is not finished.
The January 2024 cut alone represented roughly 8 percent of the gaming division’s workforce at the time. The current 3,200-job plan is on track to match or exceed it once complete.
Halo development moves to Activision
Xbox is handing the next mainline Halo game to a new team built inside Activision. That team will work independently of Halo Studios, the group formerly known as 343 Industries. Activision will also take over publishing oversight of Rare and World’s Edge, the studio behind Age of Empires.
The move folds two more Xbox first-party teams under Activision’s umbrella. It puts a large share of Xbox’s internal development pipeline under a publisher best known for Call of Duty, rather than the studios that built Halo, Rare’s catalog, or Age of Empires. Halo Studios itself keeps a narrower remit than it has held since Microsoft renamed the team in 2024.
Obsidian folds into Bethesda
Obsidian, the studio behind Fallout: New Vegas and Pentiment, will merge into Bethesda. Xbox says Obsidian will keep working on its current projects. Those include the survival game Grounded and a previously announced Fallout project made in collaboration with Bethesda Game Studios.
The merger ends Obsidian’s run as a standalone studio inside Xbox, six years after Microsoft acquired it. It also places two of the company’s largest role-playing game developers under one management structure for the first time.
Playground, Turn 10, and King also consolidate
Xbox is formally merging Playground Games and Turn 10 Studios, the developers behind Forza Horizon and Forza Motorsport, into a single studio. Xbox describes the two as creative and franchise partners of more than a decade.
Even so, they have built separate games on separate engines under separate leadership. A formal merger raises questions about how the combined team divides future entries.
Separately, King, the Candy Crush Saga developer Microsoft picked up through its Activision Blizzard acquisition, is uniting with Microsoft Casual Games. The move brings the company’s mobile puzzle business under one roof.
Ninja Theory heads toward closure
Not every studio caught in the reorganization gets absorbed elsewhere. Compulsion Games, maker of We Happy Few, has already transitioned to independent status. Double Fine, the Psychonauts studio, and Undead Labs, creator of State of Decay, have moved to new publisher ownership.
Ninja Theory, the studio behind Hellblade and Hellblade II, has not landed the same way. Xbox says it is now moving toward closing the studio after two attempted divestiture deals fell through. That is a fate the company avoided for the other studios it chose to spin out rather than shut down.
Developers question whether the plan will work
When Sharma announced the restructuring, she wrote that “great technology gets better when it gets simpler, not bigger.” She described a management structure that had “slowed decisions, blurred accountability, and made it harder to deliver for players.” Three months later, that stated goal sits awkwardly next to the changes themselves.
Handing Halo to Activision adds a reporting line rather than removing one. So does merging Obsidian into Bethesda, and combining Playground with Turn 10. Each change places more studios under fewer, larger management structures instead of cutting the layers Sharma described as the problem.
Developers inside Xbox’s studios have pushed back on that premise directly. Some have said publicly that ongoing uncertainty around ownership and reporting lines makes it harder, not easier, to finish games on schedule.
The near-term test is whether Activision’s new Halo team, a restructured Obsidian, and a merged Playground and Turn 10 can ship games without repeating the disruption the layoffs themselves caused. This week’s Xbox layoffs add urgency to that question, since every studio named this week is now absorbing new management at the same time it absorbs job losses.
Studio mergers like these typically prompt new production reviews. That raises a separate question for players: whether any of the affected games, including the next Halo, the new Fallout project, or upcoming Forza entries, keep their current release windows once the reorganized teams settle into place. Xbox has not given a timeline for finishing the 3,200-job target, or said whether this round of studio mergers is the last one.