Xbox reportedly set to announce second round of layoffs this week

GamesIndustry.biz reports Xbox is preparing to announce a second round of layoffs this week as Microsoft pushes deeper into a broad restructuring of its games division. The company has already cut 3,200 roles in July, with the first wave removing about 1,600 jobs across teams including Obsidian, Bethesda, id Software, and ZeniMax Online Studios.

The latest changes are expected to go beyond headcount reductions. A source said Microsoft plans to consolidate several game studios, and VGC suggested that could mean mergers or other internal changes across Xbox Game Studios, Bethesda, Activision, and Blizzard. That kind of reshaping can affect production pipelines, leadership layers, and how teams share tech, tools, and support.

Microsoft has framed the restructuring as a response to overexpansion, saying Xbox had become too fragmented and had spread resources too thin. In a memo to staff, Xbox leadership said platform teams had grown 40% since the current hardware generation began even as player base and overall play time declined.

For developers, the practical impact is obvious: fewer layers, fewer duplicated functions, and likely more pressure on remaining teams to align around a smaller set of priorities. Microsoft says it wants Xbox to return to growth in 2027, but the near-term story is continued consolidation, more uncertainty for studio staff, and another reminder that even large platform holders are still rebalancing after years of aggressive expansion.