Microsoft has laid off approximately 268 Xbox employees, targeting Halo Studios, other first-party studios, and the central management layer. The cuts are part of a broader restructuring of its gaming business that already saw 1,600 jobs eliminated in July, and bring the company closer to a previously announced target of 3,200 roles cut over its 2027 financial year. According to a report from The Verge, the job reductions may also involve the closure of developer Ninja Theory.
Microsoft's ongoing reset of its gaming division has resulted in another wave of layoffs, with around 268 roles being eliminated across Halo Studios, other first-party studios, and the Xbox Game Studios (XGS) management and central functions layer, according to a memo from Xbox chief content officer Matt Booty. "We are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer," Booty said in a statement published on Xbox's news site.
The move comes after 1,600 Xbox employees were affected by layoffs in July, which Xbox CEO Asha Sharma described at the time as "the most significant restructure in Xbox history." The latest cuts are part of the 3,200 roles that Microsoft previously confirmed would be impacted over the course of its 2027 financial year, which ends in June 2027.
While Booty's memo did not name specific studios beyond Halo Studios, The Verge reports that the layoffs may also lead to the closure of Ninja Theory, the Cambridge-based developer best known for Hellblade: Senua's Sacrifice. Microsoft has not officially confirmed any studio closure, and further details on which other first-party teams are affected have not been disclosed.
The layoffs represent the second major reduction in Xbox staffing in 2026, as Microsoft continues to adjust its gaming strategy following its $69 billion acquisition of Activision Blizzard and subsequent integration efforts.
Analysis
Why This Matters
- These job cuts signal that Microsoft's gaming division remains under intense cost pressure, affecting hundreds of workers and potentially the development timeline of key franchises.
- The possible closure of Ninja Theory would eliminate a critically acclaimed studio, raising questions about Microsoft's commitment to narrative-driven single-player titles.
- The layoffs are part of a larger 3,200-role reduction across the company, meaning further cuts could still hit other Xbox teams before June 2027.
Background
Microsoft has been reshaping its gaming business since completing the Activision Blizzard acquisition in 2023. The integration of that massive publisher, combined with shifting market dynamics and the need to show returns to investors, has led to multiple rounds of layoffs across the broader Microsoft gaming ecosystem. The July 2026 cuts of 1,600 roles were described as the most significant restructuring in Xbox history, and today's 268 reductions are a continuation of that plan. The company has not detailed exactly which teams are affected beyond Halo Studios and the central management layer.
Key Perspectives
Microsoft / Xbox leadership: The restructuring is framed as a necessary "reset" to streamline operations and focus resources on the most strategic opportunities. The cuts are being executed against a pre-announced target, suggesting a methodical, longer-term planning process.
Affected employees and studios: Workers at Halo Studios and other impacted teams face job losses and uncertainty. For Ninja Theory, closure would mean the end of a studio with a distinct creative identity that delivered award-winning titles like Hellblade.
Industry observers and gamers: The layoffs fuel concerns about the health of Xbox's first-party development pipeline, especially for high-budget single-player games. Some may question whether Microsoft's strategy of acquiring studios is delivering the expected returns if it then proceeds to shrink them.
What to Watch
- Whether Microsoft confirms the closure of Ninja Theory or any other specific studios in the coming days.
- The impact on upcoming Xbox exclusives, particularly Halo projects at Halo Studios and any planned Ninja Theory titles.
- Any further layoff announcements before the end of Microsoft's 2027 financial year, as the 3,200-role target leaves room for additional cuts.
- How the video game community and talent market react to sustained job losses in the industry.