Xbox Lays Off 268 Employees and Restructures Its Game Studios

Xbox chief content officer Matt Booty sent employees a letter with the latest updates as part of the previously announced "Xbox reset." According to him, the company is eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer.

At the same time, Xbox is reorganizing its studio structure to reduce the number of business units and align teams that already work closely together. Activision is expanding its remit, taking on the studios World's Edge and Rare, as well as development of the next Halo title which will be handled by a separate, newly formed team unconnected to Call of Duty development. A small team will remain at Halo Studios to support the community and the franchise's existing games.

Bethesda is expanding to include Obsidian, which will continue working on Grounded and the new Fallout project alongside Bethesda Game Studios. King is expanding its remit to include Microsoft Casual Games uniting, as Booty put it, "two global leaders" in casual game design and live operations. Playground and Turn 10 are coming together as one studio focused on the Forza and Fable franchises according to Booty, the two studios have been creative partners for over a decade, and the change formally cements their collaboration within a single team.

Booty also gave an update on studios the company had previously divested. In August, Compulsion and Double Fine returned to independent management with their IP, back catalogs, and transitional funding. Undead Labs, for its part, has successfully transitioned to independent management with a new publisher. The studio confirmed that State of Decay 3 remains in development and is targeting a 2027 release on Xbox Series X|S, PlayStation 5, and PC, including a day one release on Xbox Game Pass.

Ninja Theory, however, may face a different fate: two separate agreements to sell or divest the studio fell through, and Xbox is now beginning a consultation process with employees on a proposed closure of the studio. The company stresses that it continues to explore other possible paths forward for the studio. Consultation regarding Arkane remains underway and is expected to continue through the end of the year.

Booty noted that he plans to personally visit the studios in the coming days, and on October 6 an all-Xbox town hall will take place, where the team will reflect on its progress and look ahead to one of the strongest game lineups in the company's history.