Xbox is laying off 3,200 people and dumping 4 studios in 'the most significant restructure in Xbox history'

The axe has fallen on Xbox, which announced another major round of layoffs that will see approximately 3,200 people put out of work, with 1,600 losing their jobs today and another 1,600 to follow over the course of the company's fiscal year. Four studios—Compulsion Games, Double Fine, Ninja Theory, and Undead Labs—will also "leave Xbox to new management," as CEO Asha Sharma put it.

None of those studios will close as a result of today's cuts, which is the only upside to the whole thing: Compulsion and Double Fine will go independent again, "with their IP, catalog, and runway for their next games," Sharma said, while Ninja Theory and Undead Labs are being sold to unnamed new owners.

The situation may be grimmer for Arkane, where "management is beginning required consultation with its Works Council to review potential strategic options." Further details aren't provided but in France, where Arkane is based, and other EU nations, employee consultations are a mandatory part of the layoff process. There's no mention of the Blade game Arkane is currently working on.

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Xbox is also "making reductions across other units," including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, although Sharma said no ongoing projects will be cancelled. Minecraft studio Mojang and the mobile studio King will also now report directly to Sharma.

Sharma declared that "our business today is not healthy" as a prelude to the cuts, a statement made almost exactly one year after her predecessor, Phil Spencer, declared that "our platform, hardware, and game roadmap have never looked stronger" as he imposed mass layoffs of his own in 2025. Sharma also repudiated Spencer's all-in bet on Game Pass and multi-platform releases, saying that while they "created meaningful value, they did not grow at the pace we expected."