Xbox is reportedly bracing for its second wave of layoffs this year. According to an exclusive report from The Information, Microsoft’s gaming division plans to cut “hundreds” more jobs this week while consolidating several of its game studios — the latest move in Xbox CEO Asha Sharma’s sweeping effort to reset the business and return it to profitability.
Second Wave of Cuts Follows July’s 1,600 Layoffs
The report, which cites a source briefed on Microsoft’s plans, does not say which studios are affected or which are being consolidated. But if it holds, this would be the second major wave of Xbox layoffs this year, following July’s restructuring that eliminated 1,600 jobs. When those cuts were announced, Sharma also said the company intended to cut a further 1,600 roles within a year — roughly 3,200 in total — and the report follows a flurry of warnings from games journalists that “bad” Xbox news was imminent.
July’s layoffs hit almost the entirety of Xbox’s studio portfolio. The division shed entire studios: Double Fine Productions and Compulsion Games bought back their independence, Ninja Theory and State of Decay maker Undead Labs were sold to as-yet unnamed buyers, and Dishonored developer Arkane Lyon remains in consultation with its fate unknown. The cuts also reached Bethesda, Elder Scrolls Online studio ZeniMax Online, and Doom maker id Software — even as Sharma’s plan centers Xbox on its biggest franchises, such as The Elder Scrolls and Fallout. Morale was reportedly low after the July round, and it is unlikely to improve this week.
Blizzard Was Spared Last Time — Not Anymore
Bloomberg’s Jason Schreier recently told the 8-4 Play podcast that layoffs at Blizzard Entertainment — which was spared in the first round of job cuts — were “imminent.” Xbox is a huge organization, spanning at least three operationally distinct publishers: Xbox Game Studios, Bethesda Softworks, and Activision Blizzard (with Activision and Blizzard acting as separate publishing entities). That leaves plenty of room for consolidation moves.
Halo May Move Under Activision Blizzard
The most explosive rumor around the reorganization concerns Xbox’s premier franchise. Reliable leaker NateTheHate reports that the Halo brand is set to move under Activision Blizzard — though the fate of developer Halo Studios is unknown, with the suggestion being that a new developer takes over the franchise under the Call of Duty publisher. NateTheHate added that “more than just Halo” will move to Activision Blizzard, and that other studios will move between companies within Xbox.
Another potential shuffle: Obsidian Entertainment moving from Xbox Game Studios to Bethesda. That is pure speculation for now, but it would make sense — Obsidian is already collaborating with Bethesda Game Studios on a new Fallout game.
Satya Nadella Backs the Overhaul
According to The Information, Microsoft CEO Satya Nadella and CFO Amy Hood weighed carving out or selling Xbox entirely, but ultimately shelved the idea in favor of supporting Sharma’s overhaul. The shake-up is already being felt beyond Xbox’s own walls — as seen when Xbox took over publishing of Hideo Kojima’s Physint after Sony stepped away.