Microsoft is reportedly preparing for more significant layoffs within its gaming division, with a focus on the Xbox team.
Sources close to the company have shared with Bloomberg that the cuts could be announced as soon as next week, signaling a difficult period ahead for employees.
The layoffs are expected to span multiple areas of the gaming business, including sales teams and other key departments. According to The Verge, Microsoft’s restructuring efforts will impact the Xbox division before the release of its highly anticipated next-gen consoles. The company recently announced a partnership with AMD to power the upcoming Xbox consoles, although a launch date remains unconfirmed.
Additionally, Microsoft is reportedly restructuring its Xbox distribution network in Central Europe, which will involve ceasing operations in certain regions. As the company adjusts its strategy, staff members are on edge, bracing for more layoffs, with many employees anonymously expressing their concern that it feels like a matter of when, not if.
This move is not entirely unexpected. Since acquiring Activision Blizzard for a staggering $69 billion, Microsoft has made several rounds of cuts in its gaming division. In January 2024, 1,900 employees were laid off, followed by more cuts in March when Redfall developer Arkane Austin and Hi-Fi Rush developer Tango Gameworks were shut down. By September 2024, another 650 staff members were let go, and the largest round came in May 2025, when 6,000 employees-around 3% of the entire workforce-lost their jobs.
Despite these layoffs, Xbox boss Phil Spencer remains focused on navigating the company through these challenges. Speaking to IGN in June 2024, Spencer stated, “I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make.”