Microsoft may initiate another wave of layoffs in its Xbox division this week, which would affect hundreds of employees and could lead to the consolidation of some studios. This information was disclosed by The Information and subsequently reported by VGC.
According to a source familiar with the company's plans, this would be the second major staff reduction carried out by Xbox during 2026. Although there is no confirmation yet about which teams will be directly impacted, the report suggests possible mergers or reorganizations involving the publishing structures of Xbox Game Studios, Bethesda, and Activision Blizzard.
These new cuts follow the restructuring process led by Xbox CEO Asha Sharma, who previously declared the intention to 'reboot' an operation that was not in a healthy state.
In July, Microsoft had already implemented an initial round of cuts that affected about 1,600 employees, with a forecast of eliminating another 1,600 positions by the end of the company's fiscal year. The reorganization also altered the studio configuration, causing Compulsion Games and Double Fine Productions to operate independently again, while Ninja Theory and Undead Labs began negotiations to change ownership.
Other teams also felt notable reductions; ZeniMax Online Studios lost hundreds of employees, and approximately 100 positions were eliminated at id Software. This potential new round expands a series of cuts affecting Microsoft's gaming division over several years.
Previously, in 2024, the company announced the layoff of 1,900 workers in the Xbox, Bethesda, and Activision Blizzard areas. In 2025, there was a reduction of about 9 thousand positions across all of Microsoft, which also impacted the gaming division. This period was marked by the cancellation of projects, such as the reboot of Perfect Dark and Everwild, from Rare.
With the possibility of studio consolidation, in addition to layoffs, it is evident that Microsoft may proceed with the reduction and reorganization of the structure built after years of major acquisitions in the sector. To date, the company has not officially confirmed which studios will be consolidated nor the exact number of employees affected by this new phase.