Xbox Layoffs Reportedly Return This Week, With Studio Mergers on the Table

Another round of cuts appears to be heading for Xbox. According to a new report, Microsoft's gaming division is preparing to lay off hundreds more employees this week, and the reductions are expected to come with the consolidation of "several" studios under its umbrella.

The report describes this as a second wave, following earlier layoffs that already shook the division. Details remain thin. It is not yet clear which studios will be merged or folded together, how the headcount will be split across teams, or whether any projects in development will be cancelled as a result.

Consolidation could mean a few different things in practice. Smaller teams might be absorbed into larger ones, shared services could be pooled, or studios working on similar types of games could be combined under a single leadership structure. Whichever route Xbox takes, the people most exposed are usually those in overlapping roles once teams are merged.

For a company that has spent the past several years buying up developers and publishers, the pivot toward trimming and restructuring marks a sharp change in tone. Xbox has built out one of the largest first-party rosters in the industry, and keeping all of those studios running independently is an expensive proposition. Merging them is one way to cut costs without closing them outright.

Microsoft has not publicly confirmed the reported plans, and the specifics could shift before any announcement is made. Reports of this kind often surface just ahead of internal communications, so official word could arrive within days.

The wider games industry has been dealing with waves of layoffs for a while now, and each new round adds to the uncertainty for developers, many of whom have already been through several rounds of upheaval. We will update this story when Microsoft or Xbox leadership addresses the reports.