According to insider SneakersSO, Xbox will face another wave of layoffs in the first quarter of 2026 — comparable in scale to the one that took place this summer. This will be the fifth layoff in the last two years.
The gaming industry is going through a difficult time: project cancellations, studio closures, and mass layoffs have become the norm. The situation is particularly difficult for Xbox — according to insiders, the division's businesses have not generated stable profits since the Xbox 360 era.
The previous reduction took place on July 2, 2025, when Microsoft laid off about 9,000 employees, of which about 2,000 were from Xbox. The Initiative studio and several projects were closed then. Despite an extensive portfolio of franchises, including recently acquired franchises, the company is going to focus only on key brands, and, according to rumors, plans to abandon its own console production.
The next wave of layoffs, it is claimed, will affect the core Xbox team, as the need for device development and assembly will disappear when the hardware direction is curtailed.
