Xbox reportedly to cut hundreds of jobs and consolidate studios

Microsoft plans to lay off hundreds more Xbox staff in the week starting 22 September 2026 and consolidate several game studios, according to a report citing a source briefed on the plans.

The account was first published by The Information and detailed by Video Games Chronicle. It describes a second major wave of cuts, following layoffs in July.

The reported consolidation points to mergers or staff moves across Xbox Game Studios, Bethesda, Activision and Blizzard. In plain terms, that can mean teams combined, projects moved between studios, or offices closed, rather than studios simply shutting on their own.

The July wave initially affected 1,600 jobs, with a further 1,600 planned by the end of Microsoft's business year, according to the latest reporting. Microsoft said on its official company blog on 6 July 2026 that Xbox was restructuring to position the business for long-term success.

Within that July round, the cuts included hundreds of roles at ZeniMax Online, the developer of The Elder Scrolls Online, and around 100 roles at id Software, the maker of Doom. Blizzard, the maker of Diablo and Warcraft, was largely unaffected by that first wave.

The same reporting says four studios are leaving Xbox ownership. Compulsion Games and Double Fine Productions have returned to fully independent studios after separating from Xbox. Ninja Theory and Undead Labs have entered terms to join new ownership to leave Xbox.

Xbox chief executive Asha Sharma has said she planned on “resetting the business”, which was “not in a healthy spot”. The current reports follow a cut of 9,000 jobs last summer that hit the Xbox division hard, and the cancellation of a planned Perfect Dark reboot.

Earlier company-wide cuts provide context. Microsoft cut 4,800 roles in July 2026, with more than 30 percent in the Xbox division, and late-June 2026 cuts affecting sales, consulting and Xbox roles amounted to under 2.5 percent of its workforce.

For players, this matters because the teams named cover long-running series and live games, meaning games sold and updated in seasons after launch. Changes to staffing and studio organisation can affect support schedules, future projects and where those games are made.