Microsoft’s gaming division is eliminating 268 roles and undertaking a significant reorganisation of its game studios, according to an internal announcement shared on XBOX Wire. The cuts affect Halo Studios, other first-party developers, and elements of the XGS management and central functions.
Job Reductions and Ongoing Restructuring
The 268 job eliminations form part of a broader “reset” for the gaming arm, first outlined earlier this year. With these actions, the company states it is approximately three-quarters of the way through its previously announced restructuring efforts, which have included studio divestitures since July. The internal communication expressed gratitude for the contributions of affected colleagues and acknowledged the difficulty of the situation for those leaving and their teams.
These job losses follow previous industry-wide discussions and concerns, including a recent report regarding id Software Dev Criticises Xbox Over Layoffs, highlighting a challenging period for many in the sector.
Studio Reorganisation and Divestiture Updates
Further to the job cuts, the gaming division is reorganising its studios with the stated aim of strengthening franchises and games. This involves operating fewer business units, aligning closely collaborating groups, and concentrating publishing expertise. Key updates on studio divestitures were also provided:
- Compulsion and Double Fine: In August, these studios returned to independent management, retaining their intellectual property, back catalogues, and receiving runway funding.
- Undead Labs: This studio has successfully transitioned on similar terms. A new publisher will now oversee the release of State of Decay 3, which is confirmed to launch day one on Game Pass. This follows news earlier this year concerning Xbox Game Pass: July 2026 Game Removals Announced, keeping the service dynamic.
- Ninja Theory: Two separate agreements for the studio fell through. The company will now begin consultation with employees regarding a proposed closure, while also continuing to explore other potential paths forward.
- Arkane: Consultation regarding this studio’s future remains underway and is anticipated to conclude by the end of the year.
The focus for the immediate future is on supporting those affected by these changes and ensuring respectful treatment, according to the XBOX Wire update.
Frequently Asked Questions
How many roles are being eliminated?
Microsoft’s gaming division is eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer.
What is the status of Ninja Theory?
Two separate agreements for Ninja Theory fell through. Consultation with employees on a proposed closure will now begin, with other paths also being explored.
Will State of Decay 3 still be released?
Yes, State of Decay 3 will be released day one on Game Pass, following Undead Labs’ successful transition with a new publisher.
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