Microsoft lays off 268 Xbox employees as studios reorganize and Ninja Theory closure looms

Microsoft is laying off 268 Xbox employees today as part of an ongoing restructuring of its gaming division. The cuts span Halo Studios, other first-party studios, and Xbox Game Studios management and central functions.

Xbox chief content officer Matt Booty announced the layoffs in a memo, saying: "We are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer." He added, "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring."

Today's cuts are part of a larger Xbox reorganization. Activision is now taking on the Halo franchise, Sea of Thieves, and World's Edge, the studio behind Age of Empires. Playground Games and Turn 10 Studios, known for Forza, are merging. Obsidian Entertainment is moving under Bethesda Softworks.

Microsoft is also accelerating its plan to divest several studios. Double Fine and Compulsion Games have already been spun off as independent companies. Undead Labs has now "successfully transitioned on similar terms," according to Booty.

Ninja Theory's future remains uncertain. Two separate agreements to sell the studio fell through over the summer. Microsoft is now beginning a consultation period with Ninja Theory employees about a proposed closure, while continuing to explore other potential buyers and paths forward.

Arkane Studios and its Blade game project remain under consultation regarding their future, in accordance with French labor laws. Booty said this consultation "is expected to continue through the end of the year."

These layoffs follow July's cuts, when 1,600 Xbox employees were affected. Xbox CEO Asha Sharma described those earlier cuts as "the most significant restructure in Xbox history." Today's reduction brings Microsoft closer to the 3,200 total roles impacted across its 2027 financial year, which ends in June 2027.