Microsoft’s Xbox division has announced another round of job cuts, with 268 roles being eliminated as part of the restructuring initiated under CEO Asha Sharma. The latest layoffs come just months after the company announced 1,600 job cuts in July.

In a memo shared on the Xbox website, chief operating officer Matt Booty said the latest round affects employees across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer. The cuts are part of the 3,200 roles Microsoft had previously said would be affected during its 2027 financial year, which ends in June 2027.

Xbox Says Restructuring Is Three-Quarters Complete

Booty said the changes implemented since July, including studio divestitures, have taken Xbox roughly three-quarters of the way through its previously announced restructuring.

“The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” he said.

Booty also asked employees to support colleagues affected by the latest cuts and to treat one another with care and respect.

“At our October 6 town hall, we will come together as an ALL-XBOX team to reflect on our progress and look ahead to one of the strongest game lineups in our history,” he added.

Xbox is expected to hold the town hall on October 6, where employees will discuss the restructuring and the company’s upcoming game pipeline.

Xbox CEO Asha Sharma Had Called Business ‘Not Healthy’

The latest layoffs follow a broader push by Sharma to restructure Xbox and improve the division’s profitability. Before the July layoffs, Xbox was reported to have around 16,000 employees globally.

In July, Sharma told employees, “Our business today is not healthy.” She also said Xbox’s margins were “3–10 times lower than comparable platform and publishing businesses.”

The restructuring has involved changes across Xbox’s gaming studios, with the company seeking to reduce the number of business units and consolidate teams that already work closely together.

“The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise,” Booty said.

Major Changes Across Xbox Studios

As part of the restructuring, Activision, the studio behind Call of Duty, will take on World’s Edge and Rare. Activision will also develop the next Halo title through a new team.

A smaller team at Halo Studios will continue working on the Halo community and supporting games that are already in the market.

Obsidian will be merged into Bethesda, the studio behind Starfield. Xbox said Obsidian’s existing projects, including Grounded, will continue as planned. A new Fallout project being developed with Bethesda Game Studios will also remain on track.

King, the studio behind Candy Crush, will now also include Microsoft Casual Games. Playground Games and Turn 10, meanwhile, will be brought together as a single studio focused on the Forza and Fable franchises.

Earlier, Xbox had also confirmed plans to spin off five gaming studios, including Compulsion Games and Double Fine Productions, as part of the wider restructuring of its gaming business.

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