Xbox Continues its 'Reset': Cuts 268 More Jobs and Merges Some Studios
Xbox has confirmed another round of layoffs, this time affecting 268 employees. The news comes straight from chief content officer Matt Booty, who shared the update in a memo to staff and on the Xbox Wire.
This latest cut is part of the larger Xbox "Reset" plan that began back in July. That's when CEO Asha Sharma first announced what she called "the most significant restructure in Xbox history," a plan expected to eliminate around 3,200 jobs by the end of fiscal year 2027.
Layoffs
According to Booty's statement, the reductions are hitting several areas at once. He said the layoffs are focused "across Halo Studios, other first-party studios, and the XGS management and central functions layer."
With this round factored in, Xbox is now roughly three-quarters (75%) of the way through its total planned job cuts for the fiscal year.
What's Happening to Ninja Theory?
This is easily the hardest part of the announcement. Ninja Theory, the studio behind Hellblade and the upcoming Senua sequel, was reportedly in talks to be sold off to new owners, similar to what happened with other Xbox studios earlier this year. Unfortunately, those deals didn't work out.
"Two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward."
A proposed closure means the studio's future is genuinely uncertain right now, and so is the future of Senua, which was previously slated to release sometime in 2027.
What About the Other Studios?
Undead Labs, the team behind State of Decay 3, managed to avoid the same fate. Booty confirmed that Undead Labs "has now successfully transitioned on similar terms," meaning the studio has found a new publisher outside of Xbox. State of Decay 3 is still moving forward too, and will release day one on Game Pass despite the change in ownership.
Compulsion Games and Double Fine also completed their transitions back in August. Both studios returned to independent management, keeping their intellectual property, back catalogs, and funding to continue future projects.
Arkane's situation remains unresolved. The studio has been under review since July due to French labor laws requiring consultation with its Works Council before any major restructuring decisions. According to the memo, "consultation with Arkane remains underway and is expected to continue through the end of the year." There's still no word on what this means for Arkane's Marvel's Blade project.
Xbox Reorganizing Its Studios Too
Alongside the layoffs, Xbox is restructuring how its remaining studios are grouped and managed. The idea is to operate with fewer business units overall, while pairing teams that already work closely together.
Activision is taking on a bigger role here. The publisher will now oversee both World's Edge and Rare, the studios behind Age of Empires and Sea of Thieves respectively.
Activision is also set to lead development on the next mainline Halo title, using a brand new team built specifically for that project, separate from the ongoing Call of Duty pipeline.
Bethesda is expanding too. Obsidian Entertainment will now fall under Bethesda's management, though Obsidian will keep working on its current projects, including Grounded. The studio is also joining a new Fallout project being developed alongside Bethesda Game Studios.
King, known for Candy Crush, is absorbing Microsoft Casual Games into its operations. Xbox describes this as "uniting our two global leaders in casual game design and live operations" under one roof.
Maybe the most notable change involves Playground Games and Turn 10 Studios, which are merging into a single studio focused on the Forza and Fable franchises. These two teams have worked closely for years already, so this move formalizes a partnership that's technically been running for over a decade.
What Happens to Halo Studios Now?
With Activision taking the lead on the next Halo game, Halo Studios itself is shrinking in scope. Booty's memo notes that a smaller team will remain in place, but their focus is shifting. Going forward, they'll be responsible for supporting the existing Halo community and maintaining games that are already live, rather than leading development on future entries in the series.
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