Archive · 22 Sep 2026
Microsoft Xbox Layoffs Reshape Studios Amid Profit Concerns
Microsoft is changing how its Xbox game studios are organized.
It is laying off 268 more workers.
Activision will lead development of the next Halo game.
Halo Studios will still work on existing Halo games, but some of its workers will also lose their jobs.
Activision will also manage Rare and World's Edge.
Bethesda is expected to take over Obsidian.
Microsoft says Xbox needs to improve because its profits and revenue have fallen.
The company had planned to cut 3,200 Xbox jobs in total.
Microsoft's Xbox division is laying off 268 employees as it reorganizes its game studios.
Activision will oversee development of the next Halo title, while Halo Studios continues supporting existing games.
Rare and World's Edge will also come under Activision's management, according to the report.
Bethesda is set to acquire Obsidian, which will continue developing Grounded and a new Fallout project.
The cuts follow a broader plan to eliminate 3,200 Xbox jobs after declining revenue and sharply reduced profit margins.
- Who
- Microsoft's Xbox division, its game studios, Activision, Bethesda, and affected employees.
- What
- Xbox is laying off 268 employees and reorganizing responsibility for several game studios.
- When
- The changes were shared by Matt Booty on September 22 and follow broader cuts announced in July.
- Why
- Microsoft said Xbox's revenue and profit margins had declined and that the business needed a strategic reset.
Microsoft's restructuring rationale
Workforce and creative concerns
Reason for the cuts
Microsoft's restructuring rationale
Microsoft's leadership said Xbox was not financially healthy, with declining revenue and lower profit margins, making a strategic reset necessary.
Workforce and creative concerns
Employees and teams are facing additional job losses, with Matt Booty acknowledging the difficulty for those leaving and their colleagues.
Future Halo leadership
Microsoft's restructuring rationale
Putting Activision in charge of the next Halo game is presented as part of the effort to reorganize Xbox's studios and development operations.
Workforce and creative concerns
Halo has already faced expensive and inconsistent sequel development, and the article says recent games struggled to satisfy longtime fans.
- Fresh layoffs
- 268 Xbox employees are being laid off.
- Planned total cuts
- Xbox planned to eliminate 3,200 jobs, representing about 20% of its staff.
- Next Halo game
- Activision will lead development of the next Halo title.
- Other studio changes
- Activision will manage Rare and World's Edge.
- Obsidian
- Bethesda is set to acquire Obsidian, which will continue work on Grounded and a new Fallout project.
- Xbox profit margin
- Xbox's profit margin reportedly fell to 3%.
- Acquisition value discrepancy
- The article gives two figures for Microsoft's Activision acquisition: $69 billion and $75 billion in 2023.