Important Note: This is a rumor that has NOT yet been officially confirmed by Microsoft/Xbox.
No sooner has the industry recovered from the last round of layoffs than the next unsettling rumor is already circulating: Reports suggest that Microsoft at Xbox is set to initiate another major wave of layoffs as early as this week. This is according to British trade publication VGC (Video Games Chronicle), citing insider information from the business media outlet The Information. Nothing has been officially confirmed yet – neither specific figures nor the names of affected studios have been mentioned by Microsoft.
What is known about the alleged new Xbox layoff wave?
According to the report, several internal studios are to be consolidated as part of the measure, meaning they will be organizationally merged or integrated into existing structures. The report does not yet mention specific names of affected studios or an exact number of positions – The Information reportedly cites individuals familiar with the matter who wish to remain unnamed. The exact timing is also not yet completely clear, but VGC writes that the layoffs are allegedly to be announced this week. Until an official statement from Xbox or Microsoft, much remains speculation, and it is quite possible that details may change before the actual announcement.
How do these rumors fit into previous Xbox layoff waves?
Should the rumor prove true, it would by no means be the first major round of cuts at Xbox. Back in January 2024, Microsoft cut around 1,900 jobs in its gaming division, shortly after the multi-billion dollar acquisition of Activision Blizzard had been completed. In May 2025, another particularly painful wave followed: at that time, studios such as Tango Gameworks (known for “Hi-Fi Rush”) and Arkane Austin were completely closed, and several announced projects were canceled. Another consolidation would thus fit a pattern that Xbox has repeatedly shown in recent years: rapid growth through multi-billion dollar acquisitions, followed by severe cuts to the workforce.
What would another layoff wave mean for studios and players?
For affected developers, such waves typically mean massive uncertainty – often, ongoing projects are halted or put on hold even before it is publicly communicated which specific teams are affected. For players, a studio consolidation can mean that announced or in-development titles are delayed, restructured, or, in the worst case, completely canceled. The current rumors also fit the picture of a corporation that is currently changing its business strategy in the gaming sector on several fronts simultaneously: While costs are apparently to be saved in one area, Microsoft is working on new revenue streams in another – for instance, a recent patent for in-game advertising in Xbox and PC games sparked community discussions.
As long as Microsoft does not officially comment, it remains speculation. We are keeping an eye on developments and will update this article as soon as there is reliable information from Xbox Wire or the Microsoft News Center.
Source: VGC
What do you think: Will it happen this time, and if so, which Xbox studios could be affected? Let us know your thoughts in the comments!
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