Planned Xbox Layoffs Expected to Lead to Closure of Another Studio

Key Takeaways

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Xbox is reportedly planning another round of layoffs, which may result in the closure of one or more studios due to financial struggles.
The CEO of Xbox, Asha Sharma, sent a memo to employees acknowledging the challenges faced by the division after a significant revenue drop and increased hardware costs.
Gears of War, initially rumored for Sonys PS5, is now confirmed as a console exclusive for Xbox. An accidental upload and subsequent cancellation of a port for PS5 was reportedly a factor in this decision.
Halo is set to be released on Sonys PS5 next month, marking the first time a major Halo title will be available on a non-Xbox platform. This move may signal a shift in Xboxs exclusivity strategy.

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Xbox is reportedly planning another round of layoffs, which may result in the closure of a studio. A Bloomberg report anticipated that Xbox CEO Asha Sharma sent a memo to employees warning about realities that need to be faced after a nearly half-billion-dollar revenue drop over five years, combined with a fourfold increase in hardware costs since last year. This memo reportedly signaled an impending mass layoff announcement within the division. Further details emerged regarding Gears of War. Initially rumored to be in development for Sony’s PS5, it is now confirmed as a console exclusive. An accidental upload by Xbox revealed a trailer for Gears of War on PS5, and a finished version of the port was reportedly sitting on a drive before the port was recently cancelled. Separately, Halo is slated for release on Sony’s PS5 next month.

For the fourth consecutive year, Xbox is facing major layoffs. Word suggests that one of its studios might shut down due to these cuts. Asha Sharma, CEO of Xbox, sent an internal memo addressing reports about possible layoffs. According to The Verge, these cuts could lead to a studio closing down or changes in the Xbox studio roster, though no specific studio has been named. A new report from The Verge adds that the layoffs may lead to the closure of another Xbox studio, whose name remains undisclosed. Sources suggest cuts could involve closing a studio or changes within the Xbox studios team. If confirmed, this new round of mass layoffs would represent the fourth consecutive year of cuts in the Xbox division, a trend that has already resulted in the closure of several studios. The Xbox layoffs, reportedly set for July, could cost Microsoft over $20 billion in five years. This substantial figure follows a nearly half-billion-dollar dip in Xbox’s annual revenue.

Planned Xbox Job Cuts May Impact Over 1000 Employees Amid Studio Speculations

The financial year concludes on June 30th, and rumors suggest potential job losses of up to 1,000 employees. However, Microsoft has not officially confirmed the extent of these planned cuts. Last year, Microsoft closed The Initiative, which was working on the new Perfect Dark. In 2024, it terminated Arkane Austin (Redfall, Prey), Alpha Dog Games (Mighty Doom), and Tango Gameworks (Ghostwire: Tokyo, Hi-Fi Rush), although Tango Gameworks was later acquired by Krafton. Xbox Game Studios currently comprises The Coalition (Gears of War), Compulsion Games (South of Midnight), Double Fine (Kiln), Halo Studios, Inxile (Clockwork Revolution), Mojang (Minecraft), Ninja Theory (Senua), Obsidian (The Outer Worlds), Playground Games (Forza Horizon), Rare (Sea of Thieves), Turn 10 (Forza), Undead Labs (State of Decay), and Worlds Edge (Age of Empires).

In Case You Missed It

While we’re catching up on the latest in Xbox gaming, Carlos Mendoza over at Players For Life has some news about the eagerly awaited Fable reboot. Fans hoping to return to Albion soon might have to wait a bit longer though, as Xbox Game Studios has confirmed a release date shift to February 2027. But don’t worry, Matt Booty’s official statement assures us that this extra time is being taken to ensure Fable gets the optimal marketing and attention it deserves upon launch. If you’re eager to see how this delay impacts your gaming calendar, be sure to check out Mendoza’s article Fable Won’t Release in 2026, It’s Confirmed! Here’s the New Release Date. Speaking of Xbox games, Ahmed Hassan recently explored the thoughtful decision behind those beautiful Japanese cherry blossom trees remaining untouched even amidst the chaos in Forza Horizon 6. In his insightful piece ‘Forza Horizon 6: Why Japanese Cherry Blossom Trees Cannot Be Destroyed in the Game’, published on May 19th, he delves into how Playground Games balances gaming fun with cultural respect. You can check it out here Forza Horizon 6: Why Japanese Cherry Blossom Trees Cannot Be Destroyed in the Game. And in a departure from their recent multiplatform strategy, Xbox has poured significant resources into “Gears of War E-Day”. Ahmed Hassan explores how Xbox aims to reposition their historic license in his insightful piece, “Xbox Bets Big on Gears of War E-Day, Aiming to Return License to Its Roots”, published on June 8th. This new episode from The Coalition brings Marcus Fenix and Dominic Santiago back together for a heart-pounding survival adventure powered by Unreal Engine 5’s cutting-edge visuals. You can give it a read right here Xbox Bets Big on Gears of War E-Day, Aiming to Return License to Its Roots.