Loading...
Xbox plans fresh layoffs in November and January: Report
Microsoft has also been rethinking the operational models of some of its studios

Xbox plans fresh layoffs in November and January: Report

Oct 21, 2026
11:02 am

What's the story

Microsoft is reportedly planning another round of layoffs in its Xbox division. The move comes as part of an ongoing restructuring led by CEO Asha Sharma, according to a report by Fortune. The upcoming layoffs in November and January are part of Sharma's larger plan to streamline Microsoft's gaming business. In July, Xbox had announced a major organizational overhaul with plans to cut around 3,200 positions across its gaming business during the 2027 financial year.

Cost reduction

Microsoft has been slashing costs on third-party vendors

In September, Microsoft announced more job losses impacting some 260 employees. Other reports have also indicated cuts affecting hundreds of workers across Xbox and other divisions such as Cloud + AI.

Along with the layoffs, Microsoft has been slashing costs on third-party vendors and reducing management levels within Xbox to create a more streamlined operating structure.

Studio shifts

Changes in studio operational models

Microsoft has also been rethinking the operational models of some of its studios.

Double Fine Productions and Compulsion Games have been allowed to return to independent ownership.

However, the future of Ninja Theory, the studio behind Senua's Saga: Hellblade, remains uncertain, with speculation about possible closure.

Undead Labs is also linked with ownership changes, but details remain unclear.

ADVERTISEMENT

Market rumors

Microsoft's potential gaming division separation speculation dismissed

The ongoing restructuring has sparked speculation about a potential sale or separation of Microsoft's gaming division from the rest of its business.

However, Judson Althoff, Microsoft's commercial business CEO, dismissed such interpretations in comments to Fortune.

He said Sharma's appointment is not consistent with a plan to sell Xbox.

Despite the uncertainty over its organizational structure, Microsoft continues to develop its hardware roadmap for future gaming devices.

ADVERTISEMENT