Industry insider George Broussard, co-founder of 3D Realms and creator of Duke Nukem 3D, has revealed troubling news about Xbox’s future. According to his sources, Microsoft Gaming is preparing significant layoffs, potentially affecting 1,000 to 2,000 employees. The cuts could hit the Xbox division hardest, with rumors suggesting entire studios may shut down.
The Xbox unit reportedly employs around 10,000 people, meaning these layoffs could eliminate 10-20% of its workforce. When factoring in all of Microsoft Gaming—including Activision Blizzard and Zenimax—the total impact may be closer to 5-10% of the 20,000-person organization. These cuts follow Microsoft’s $68.7 billion Activision Blizzard acquisition, which has reportedly strained budgets and leadership.
What’s Behind the Xbox Layoffs?
The gaming industry has seen widespread job cuts in 2024 and 2025, with companies like EA, Sony, and Riot Games also reducing staff. For Microsoft, the Activision Blizzard merger likely created redundancies, leading to tough decisions about which teams stay and which go.
Sources indicate the Xbox layoffs will primarily affect overlapping positions between Xbox Game Studios and Activision Blizzard teams, though some independent studios may face complete closures.
Employees across Xbox studios are said to be anxious, with internal discussions hinting at possible studio closures. While no specific teams have been named, underperforming or overlapping divisions are most at risk. Microsoft has not yet confirmed the layoffs, but past patterns suggest an official announcement could come soon.
What This Means for Xbox’s Future
These Xbox layoffs could have far-reaching consequences for Microsoft’s gaming strategy. With development teams being consolidated, several anticipated projects may face delays or cancellations. The cuts also raise questions about Microsoft’s commitment to Game Pass content production and first-party exclusives. While Microsoft has yet to officially confirm the layoffs, the gaming community is bracing for what could be one of the largest workforce reductions in Xbox history. The coming weeks will reveal how these changes affect both employees and the future of Xbox gaming experiences.
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