Xbox has initiated the next phase of its major business ‘reset’ by laying off hundreds more staff and consolidating its biggest studios under shared banners.
The fresh moves follow a major overhaul in July which saw the company laying off 3200 employees and divesting four studios: Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs.
Xbox announces fresh layoffs, studio consolidations – quick links
What to know about Xbox’s latest restructure
As detailed in a new blog post, Halo Studios has been gutted and 268 roles have been eliminated. While the studio remains in operation to ‘support the Halo community and games in-market,’ Activision will now be developing the next Halo game with a ‘new, purpose-built team.’
Activision is now also home to World’s Edge (Age of Empires) and Rare (Sea of Thieves).
Further consolidations have taken place at other studios, with the overarching goal of ‘strengthening’ Xbox’s major franchises by ‘operating fewer business units’ and ‘aligning groups that already work closely together, and focusing [its] publishing expertise.’
Obsidian Entertainment (Avowed, The Outer Worlds 2) will now be part of Bethesda. It will reportedly continue its current projects, including Grounded 2, as well as working on a new Fallout project in collaboration with Bethesda Game Studios.
King will now include Microsoft Casual Games, a self-explanatory unit working on mobile games and other casual experiences.
Playground (Fable, Forza) and Turn 10 (Forza Motorsport) will combine as ‘one studio’ focussed on the Forza and Fable franchises. As Xbox says, these two studios have worked together for several years now, and this change will ‘formally move their work into one team.’
Ninja Theory buyer falls through, Undead Labs now independent
As an update to changes announced in July, Xbox has also confirmed bad news for Ninja Theory, and significant developments for Undead Labs. Both studios were previously under the Xbox banner, and were planned to be divested and sold off earlier in 2026.
According to Xbox, while there had been interest in Ninja Theory being acquired, two separate agreements have reportedly fallen through. It will now begin a consultation with employees on a ‘proposed closure’ for the studio. While it’s leaving the option to explore other paths forward, it’s looking unlikely the studio will be saved, and that their newly-announced game Senua will see the light of day.
Undead Labs, meanwhile, has transitioned to become an independent studio. In a post on LinkedIn, management confirmed this will come with ‘a significant number’ of layoffs.
Changes at Xbox are ongoing
It’s worth noting the changes announced at Xbox are ongoing, and only ‘roughly three-quarters’ complete.
Further changes are expected as the company continues to restructure, with these likely to include further job losses and studio changes.
As always, our thoughts are with those now out of work at Xbox, and for those left behind.
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