This week, Microsoft cut 268 jobs in its Xbox gaming division. The Xbox layoffs in 2025 are part of a broader reorganization that is shifting studios and gaming brands. According to Microsoft, the restructuring is about three-quarters complete.
The changes have affected Halo Studios, other Microsoft-owned studios, and the management and central units of Xbox Game Studios. Most of the Halo Studios team has been laid off, leaving only a small group to support existing games. The website bbcnewswire.com mentions Halo: Combat Evolved, while other media refer to Halo: Campaign Evolved. Former Xbox chief Phil Spencer stated back in 2011: "If we lose our way with Halo, we lose our way with Xbox."
Xbox Layoffs 2025: How Studios Are Shifting
- Playground Games and Turn 10 Studios are merging into one studio that will work on the Forza and Fable franchises.
- Obsidian is moving from Xbox Game Studios to Bethesda Game Studios and will work on a new installment of Fallout.
- Rare, the creator of Sea of Thieves, is transitioning to Activision.
- World's Edge, the studio behind the Age of Empires series, is heading to Activision, with some team members facing layoffs.
According to analyticsinsight.net, the next Halo will be developed by Activision in a newly formed team, separate from Call of Duty. Sources familiar with the situation indicate that this is the most significant restructuring in Xbox's history, led by Xbox head Asha Sharma.
Reactions to the Layoffs
Microsoft CEO Satya Nadella described the changes as beneficial, stating: "I feel fantastic about the IP we have right now."
Former World's Edge head Shannon Loftis, who spent nearly 30 years at Microsoft before retiring in 2022, criticized Xbox head Asha Sharma, claiming that Xbox has wasted talent, brands, time, and money. Analyst Mat Piscatella remarked: "These aren't cuts a serious business makes, in my opinion."
According to insider information, Xbox lost $300 million in Call of Duty sales due to the game's inclusion in Game Pass. Xbox hardware revenues have declined for the third consecutive year, and pre-orders for Grand Theft Auto VI are heavily favoring the PS5.