Microsoft cut 268 positions in its gaming division this week while reassigning several Xbox studios. This marks the latest phase of ongoing restructuring at Xbox. Since early 2024, Microsoft has conducted multiple rounds of layoffs and shut down some game studios.
In this round of adjustments, most employees at 343 Industries were laid off. Microsoft retained a team responsible for existing titles such as Halo Infinite and Halo: Combat Evolved. According to an insider, the next Halo game originally in development at 343 Industries was still years away from release, prompting Microsoft to cancel the project.
Some 343 Industries employees waited hours after the layoffs began this week to learn whether they were affected. News of the changes first appeared on the public Xbox blog before employees received notifications. Josh Daniels, former cinematic director at 343 Industries, stated that he received a promotion and was laid off in the same week.
Other studios have also seen changes in their reporting structure. World's Edge, the developer behind Age of Empires, and Rare, the studio behind Sea of Thieves, have been transferred to Activision, with World's Edge also affected by this round of layoffs. Turn 10 Studios and Playground Games, both responsible for the Forza series, will merge into a single studio.
Obsidian Entertainment has been moved from Xbox Game Studios to Bethesda Game Studios and will develop new entries in the Fallout series. The layoffs also impacted planning and management roles within Xbox's core business. Asha Sharma, head of Xbox, had previously told employees that Xbox would be restructured through significant adjustments to its content lineup, platforms, and operations.