Xbox reportedly plans hundreds more cuts and studio consolidation

Xbox is reportedly preparing to cut hundreds of roles this week and consolidate several of its game studios.

The report, published on 22 September 2026, describes the move as a second wave of layoffs this year, according to a report citing a source briefed on Microsoft's plans. Xbox is Microsoft's gaming division, and its studios are the teams that make and support its video games.

Eurogamer reported the details from an exclusive briefing by The Information Eurogamer. That briefing did not name which studios would be affected or combined. No confirmation from Microsoft was included in the account.

The reported cuts would follow restructuring announced in July that removed 1,600 roles at Xbox. At that time, Xbox chief executive Asha Sharma said a further 1,600 roles would go within about a year, by approximately next summer. Sharma described the aim as a reset to return the gaming division to profitability.

Under that plan, Xbox would centre future development on its largest series, including The Elder Scrolls and Fallout. Both are long-running role-playing properties with large player bases. No release dates, prices or project cancellations were named in the latest report.

The July restructuring already changed the shape of the organisation. Double Fine Productions and Compulsion Games bought back their independence from Xbox. Ninja Theory and Undead Labs, the maker of State of Decay, were sold to buyers who have not been publicly named. Arkane Lyon, the studio behind Dishonored, entered a consultation process, a formal discussion with staff required under local labour rules, with its future still unclear.

Those July cuts affected Bethesda, the maker of Fallout and The Elder Scrolls, and ZeniMax Online, the developer of The Elder Scrolls Online. Doom and Quake maker id Software was also heavily affected. Morale at Xbox was reported as low after the July cuts.

The figures sit inside larger reductions. Microsoft said on 6 July 2026 that it would cut 4,800 jobs across the company, about 2.1% of its global workforce, and divest up to five studios as part of an overhaul of its Xbox business Reuters. Separate reporting puts confirmed cuts in the gaming division at more than 3,000 roles before this latest reported wave Nintendo Life.

For people who play these games, studio changes can be hard to follow. Consolidation here means bringing separate teams under shared management rather than running them alone. The latest report does not link the move to any specific game delay or cancellation.