Xbox is reportedly preparing to lay off hundreds of employees this week while consolidating several of its game studios as Microsoft continues restructuring its gaming business. The Information first reported the latest plans, citing a person briefed on them, and said the cuts would represent Xbox’s second major round of staff reductions this year. Microsoft has not publicly confirmed the new layoffs or identified which teams or studios could be affected.
The report says Xbox intends to consolidate several game studios alongside the job cuts, although it does not specify which studios will be combined or how the new structure will work. That leaves important details unresolved, including whether the changes will involve outright studio mergers, reporting-line changes or teams being moved between Microsoft’s major gaming organizations. Xbox currently operates a large portfolio spanning Xbox Game Studios, Bethesda and ZeniMax, Activision, Blizzard, King and Mojang.
The expected cuts follow the much larger restructuring announced in July, when Xbox CEO Asha Sharma said approximately 3,200 roles would be eliminated over the course of Microsoft’s 2027 fiscal year. Around 1,600 positions were affected immediately at the time, with additional reductions planned later in the restructuring period. Xbox also reduced management layers and moved four studios out of Microsoft’s gaming organization under new ownership or independent structures.
That July announcement established that further job reductions were still coming, but The Information’s latest report provides a more immediate timeline and adds the previously unspecified prospect of further studio consolidation. Sharma has described the broader changes as an effort to reset Xbox’s operating model, content portfolio and investment priorities after concluding that the gaming business needed a leaner structure. The company has also been placing greater emphasis on its largest established franchises while reducing the complexity created by years of acquisitions.
Separate indications that another round of cuts was approaching had appeared shortly before The Information’s report. Bloomberg reporter Jason Schreier said during a recent appearance on the 8-4 Play podcast that layoffs at Blizzard were imminent, while VGC editor Andy Robinson separately indicated that further negative Xbox news was expected soon. Those comments did not independently establish the scale or structure of Microsoft’s plans, but they preceded the more detailed report that hundreds of Xbox positions are now at risk.
The studio-consolidation element could ultimately prove as significant as the headcount reduction because Microsoft has accumulated one of the industry’s largest collections of development teams and publishing organizations. Activision Blizzard’s acquisition substantially expanded that structure, adding franchises and studios alongside Microsoft’s existing Xbox and Bethesda businesses. Exactly how Microsoft intends to reorganize those groups remains unconfirmed, and the original report does not name any studio that will definitely be merged or transferred.
The latest reported changes come only months after Xbox began implementing what Sharma characterized as the most significant restructuring in the division’s history. That earlier process already affected thousands of employees and changed ownership arrangements for multiple studios, making the newly reported cuts part of a broader reorganization rather than an isolated round of layoffs.
Until Microsoft formally announces the next phase, the exact number of affected employees, the studios involved and the final organizational structure remain unknown. The central claim that hundreds of additional Xbox jobs are set to be cut this week comes from The Information’s source briefed on Microsoft’s plans, while the company had not issued a public response to the report at the time of publication.
