Microsoft plans to conduct three more waves of layoffs in its Xbox gaming division in October, November, and January. Fortune reports this, citing sources familiar with the situation. The company has already cut 1,868 employees after announcing a large-scale restructuring in July 2026.
Microsoft's restructuring has already led to serious consequences for internal gaming teams and the company's relationships with well-known developers.
Specifically, Microsoft ceased to own several studios, including Double Fine, Ninja Theory, Arkane Studios, Compulsion Games, and Undead Labs. According to Polygon, Ninja Theory and Arkane were under threat of closure, while Double Fine, Compulsion Games, and Undead Labs were able to regain their independence after internal cuts.
Studios remaining part of Microsoft also faced organizational changes. The development of the Halo series was transferred to Activision, primarily known for Call of Duty. Meanwhile, Halo Studios, according to reports, may transition to a predominantly supportive role.
Obsidian Entertainment was moved under the leadership of Bethesda. The studio, known for Fallout: New Vegas and The Outer Worlds, is now working on a new game in the Fallout universe.
The layoffs also affected id Software — the creators of Doom. According to reports, the reduction in the team may limit the studio's ability to create projects on the scale of Doom: The Dark Ages.