Xbox to cut hundreds of jobs and merge studios this week, The Information reports
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Microsoft's Xbox division plans to lay off hundreds of employees this week and consolidate several game studios, The Information reported on September 22, 2026. The cuts follow a July restructuring that eliminated 1,600 roles, with another 1,600 planned by the end of fiscal 2027. Blizzard Entertainment and Halo Studios are among the teams expected to be affected.
Key Facts
- The Information reported on September 22, 2026, that Xbox plans to lay off hundreds of employees this week.
- Xbox also plans to consolidate several of its game studios, potentially affecting Xbox Game Studios, Bethesda, Activision, and Blizzard.
- In July 2026, Xbox eliminated 1,600 roles and announced plans to cut another 1,600 by the end of fiscal 2027.
- Blizzard Entertainment and Halo Studios are expected to be affected by the new layoffs, according to insiders.
- CEO Asha Sharma cited Xbox margins '3 to 10 times lower' than competitors as justification for the restructuring.
The Reported Layoffs
The Information's Aaron Holmes, citing a person briefed on the plans, reported that Xbox is set to lay off hundreds of employees this week. The layoffs would be the second major staff reduction at Xbox this year, following the July cuts. The report did not name the specific studios involved or provide a final number of affected roles. Insiders suggest the consolidation could involve mergers or restructuring across Xbox's publishing arms, including Xbox Game Studios, Bethesda, Activision, and Blizzard. Reporter Jason Schreier said on the 8-4 Play podcast that the layoffs will affect Blizzard Entertainment, which recently unveiled a StarCraft shooter, Diablo V, and World of Warcraft: Forever.
July Restructuring Context
In July 2026, Xbox eliminated 1,600 positions and announced plans to cut an additional 1,600 roles by the end of fiscal 2027. The July restructuring affected hundreds of employees at ZeniMax Online and about 100 people at id Software. As part of that reset, Compulsion Games and Double Fine became independent, while Ninja Theory and Undead Labs began transitioning to new ownership. CEO Asha Sharma described the move as a 'reset' of the Xbox division, citing margins '3 to 10 times lower' than competitors. The July layoffs totaled approximately 3,200 positions, representing nearly 20% of the Xbox division's workforce, according to Numerama.
Leadership Strategy
CEO Asha Sharma and content director Matt Booty announced a global business reset for Xbox. Sharma's strategy focuses on improving profitability by prioritizing major franchises like The Elder Scrolls and Fallout while reducing activity at smaller acquired studios. In a staff email, Sharma stated that the business had fallen to 3% profitability. The restructuring is part of Sharma's plan to increase attention on large franchises and scale back smaller studios acquired in recent years.