Microsoft Is Cutting More Xbox Jobs: What It Means for Games

Microsoft is cutting 268 Xbox jobs, including roles at Halo Studios, other game teams it owns and central Xbox management.

The cuts were detailed in an update published on Sept. 22. Actions completed since July, including studio sales, bring the company roughly three-quarters of the way through its previously announced Xbox restructuring, according to that update The Verge.

The September cut is smaller than earlier rounds. Microsoft previously confirmed 3,200 roles would be affected during its 2027 financial year, which ends in June 2027. About 1,600 Xbox employees were affected by layoffs in July. September is a smaller and more focused round centered on game teams Microsoft owns and central publishing oversight.

Microsoft is selling off four Xbox studios as part of the plan. Double Fine and Compulsion Games have already become independent from Xbox. Undead Labs has become independent on similar terms to Compulsion Games and Double Fine.

To understand that difference, think of a sale like selling a bakery with its staff and ovens intact. A closure shuts it down for good. Microsoft is using both methods, which is why job numbers and studio numbers are changing in different ways.

Ninja Theory is in the closure group for now. Two separate agreements to sell the studio fell through. Microsoft will begin consultation with employees on a proposed closure of Ninja Theory while continuing to explore other paths forward including finding another buyer.

Ninja Theory is the studio behind the Hellblade series. Its future has been uncertain since June, when The Verge reported, citing a source, that Xbox was closing the studio and that staff had been told on a call on Monday The Verge. The September update supersedes that earlier account. Closure is now described as a proposal subject to consultation, with a sale still possible.

Consultation over the future of Arkane and the Blade game remains underway in accordance with French labor laws. It is expected to continue through the end of the year. French process requires extended employee consultation before big decisions take effect, which puts Arkane on a slower schedule than the UK and US teams.

The reset is being led by Asha Sharma, the new CEO overseeing the overhaul of Microsoft's Xbox division. In June 2026, the division was planning major job cuts for the following month, alongside large cuts to marketing and other budgets as part of that overhaul Bloomberg.

The Xbox cuts sit inside a larger reduction. Microsoft's cut of 4,800 jobs accounts for about 2.1% of its global workforce Reuters. The Xbox portion, at 3,200 jobs, accounts for around 20% of its Xbox staff Bloomberg. That is a low-single-digit cut for the parent company compared with a one-fifth cut for games.

The broader context here is shape rather than headcount alone. Cutting central management while letting three mid-sized studios go independent points to a thinner central team and fewer fully owned bets. For developers, that usually means faster approvals but less backup when a project slips. For players, little changes in the short term, because released games keep running.

In my view, the open question is what Microsoft keeps central by choice. Halo Studios remains inside, as do other first-party teams. Keeping big-name games and core technology while letting single-team studios run on their own is a familiar way to control costs without leaving creative genres entirely. Worth flagging is the risk that failed sales turn into closures, as Ninja Theory shows. A story-led studio with high costs and uneven sales is harder to sell than a live-service game with regular income.

Looking further ahead, the long arc still favors more games reaching more people, just through a leaner setup. Independent Double Fine, Compulsion and Undead Labs can hire, partner and publish without fitting a platform holder's annual plan. If Arkane finds a path through consultation and Ninja Theory finds a buyer, more creative capacity will have been saved than the job-loss total suggests. If not, the industry absorbs skilled teams quickly. Talent of that caliber rarely stays idle for long.