In July, Microsoft announced plans to cut around 3,200 jobs in its gaming division as part of the so-called Xbox Reset, spread across the entire fiscal year 2027. Now, it appears this number will not be reached at all. According to a report from Nintendo Life, citing Windows Central editor Jez Corden, insiders expect Xbox to ultimately fall significantly short of its self-imposed target.
The reason for this initially sounds like good news: Microsoft is apparently focusing more on internal transfers, departmental changes, and studio spin-offs rather than traditional layoffs to reduce its workforce. Anyone who moves internally to another role or whose studio is transferred to another publisher will ultimately not appear in the official layoff statistics but will still lose their previous place within the Xbox structure.
How does this relate to the recent studio shifts?
Just on September 22, Xbox Content Chief Matt Booty confirmed an additional 268 job cuts in an official statement on Xbox Wire, while simultaneously announcing a major studio reshuffle: Halo Studios, Rare, and World’s Edge are moving to Activision; Obsidian will report directly to Bethesda and work there, among other things, on the new Fallout project; Turn 10 will merge with Playground Games. These more direct reporting lines to the respective publishers are intended to streamline the structures at Xbox Game Studios. According to observers, the restructuring is already about three-quarters complete, with the significant studio transfers contributing strongly to achieving the goal without actually having to lay off people.
What does this mean for affected Xbox employees?
For the workforce, this is a mix of relief and uncertainty. Fewer actual layoffs are generally good news, especially after months filled with bad news. At the same time, a move to a new publisher like Activision or Bethesda means new superiors, new processes, and sometimes new locations for many employees. Security in terms of predictability looks different, even if the job itself is retained.
From our perspective, this development primarily shows one thing: the Xbox Reset is not a one-time clear-cutting but a months-long restructuring process with many small stages. We have reported several times in recent weeks, for instance, about the 268 confirmed layoffs including Activision's takeover of Halo and about the Sea of Thieves community's concerns about Rare's future. The fact that the total number of layoffs will likely remain below the original target does not change that practically every Xbox studio is affected by the reorganization in some form.
Will the Xbox Reset target of 3,200 positions thus remain definitively unachieved?
Officially, Microsoft has not yet confirmed the new, lower number; the reports are based on Windows Central sources. So, there is still time until the end of fiscal year 2027, during which the exact final sum can continue to shift. However, it is already clear: the combination of studio relocations, internal transfers, and the direct layoff waves that have already occurred ensures that the originally communicated number should be understood more as a rough upper limit than a fixed target.
Source: Nintendo Life
We will continue to follow the Xbox Reset story and report back as soon as Microsoft confirms the final numbers.
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