Xbox Layoffs and Studio Closures: What’s Next for the Gaming Giant?

The rumors of a major round of layoffs at Xbox have been circulating for some time now, and according to credible reports from Bloomberg and The Verge, a significant restructuring within Microsoft is on the way. Sources suggest that Xbox could be cutting as many as 2,000 employees, roughly 10% of its gaming division.

This restructuring might even result in studio closures, with Xbox operations potentially shutting down in certain regions.

George Broussard, the co-founder of Apogee Software (now 3D Realms), shared information from industry insiders indicating that the cuts could be quite severe. While this includes the Xbox teams as a whole, it’s likely that the companies under the Xbox umbrella, such as Activision and Bethesda, will feel the impact as well. The previous rounds of layoffs have shown that even these large acquisitions aren’t immune to cutbacks.

The first major round of layoffs took place in January 2023 when Microsoft slashed around 10,000 jobs across all its divisions, not just gaming. This affected Bethesda, The Coalition, 343 Industries, and more. Then, after acquiring Activision Blizzard, Microsoft let go of 1,900 employees in 2024, around 8% of its gaming workforce. This move also led to the cancellation of Project Odyssey, a fantasy-themed survival game that had been under development at Activision.

Further job cuts and studio closures followed in May 2024, with notable teams such as Arkane Austin (known for Prey and Redfall) and Tango Gameworks (known for The Evil Within and Hi-Fi Rush) being shut down. While Tango Gameworks was later revived under KRAFTON and continued its Hi-Fi Rush series, the rest of the studios have not been as fortunate.

With Microsoft’s financial quarter ending on June 30, an official announcement could come soon. As the layoffs and closures loom, industry watchers are left wondering what this means for the future of Xbox and its studios.