Xbox Confirms 268 More Layoffs, Studio Closures and Obsidian Move to Bethesda

Microsoft has confirmed a fresh round of changes across its Xbox division, following reports that more job cuts were on the way. The company says 268 more employees will be laid off, some studios will be folded together, and others will close entirely.

One of the biggest structural shifts involves Obsidian Entertainment, which will now sit under Bethesda. The move puts the Pillars of Eternity and Outer Worlds developer alongside a publisher group that already oversees franchises like The Elder Scrolls, Fallout and Doom.

The announcement is the latest chapter in a long restructuring at Xbox. Microsoft has been reshaping its gaming business through repeated rounds of cuts and consolidation, and this update makes clear the process is still underway rather than winding down.

Details on exactly which studios will close or merge were part of Microsoft's confirmation, but the headline numbers are already significant. For the 268 people affected, it means another period of uncertainty in an industry that has seen wave after wave of layoffs in recent years.

For players, the practical impact will take time to show. Studio mergers often signal a tighter, more focused slate of projects, while closures usually mean cancelled or shelved games. Moving Obsidian under Bethesda suggests Microsoft wants closer coordination among its largest role-playing game teams, though the company has not spelled out how that will change development.

Xbox has been under pressure to justify its heavy spending on acquisitions, including the massive purchases of Bethesda parent ZeniMax and Activision Blizzard. Streamlining its studio structure appears to be part of the answer, even if the human cost keeps mounting.

Expect more clarity in the coming weeks as affected teams are informed and Microsoft outlines what happens to projects in development.