Another Xbox layoff wave is reportedly coming this week
A second round of Xbox layoffs could land as early as this week, according to insider chatter from multiple gaming industry sources. VGC editor Andy Robinson posted on Bluesky that "more bad Xbox news is coming shortly," and ResetEra moderators subsequently indicated a new wave of cuts is imminent. No official announcement has been made by Microsoft.
The July cuts, revisited
The groundwork was laid in July 2026, when Xbox CEO Asha Sharma — who replaced 12-year veteran Phil Spencer — announced 3,200 job cuts. Half of those roles went immediately; the remaining 1,600 were to be phased out across Microsoft's fiscal year 2027 (ending June 2027). That second phase now appears to be arriving. At the same time, Double Fine and Compulsion Games were spun out to independence, while Ninja Theory and Undead Labs were sold to undisclosed buyers.
Halo Studios in the crosshairs
The studio drawing the most concern is Halo Studios. Its July release, Halo: Campaign Evolved — a remake of the original — sold just 1.2 million copies globally, generating around $67 million in revenue, per GameSpot. That makes it the weakest-selling mainline Halo entry in 25 years, and its Metacritic score of 81/100 is the franchise's lowest ever. Analysts point to the campaign-only format and $50 price tag as contributing factors, alongside the game's complicated relationship with Game Pass subscribers who may have streamed rather than bought.
Reports also suggest the studio spent years trying to build live-service and online projects set in the Halo universe — all of which were cancelled internally. With nothing concrete in its pipeline to show Xbox leadership, Halo Studios is now seen as a prime candidate for further cuts or closure.
Arkane Lyon's legal limbo
French studio Arkane Lyon — makers of Dishonored and Deathloop — faces a different kind of uncertainty. French labor law requires a formal Works Council consultation before any closure can proceed, according to Tech Insider, meaning the process will drag into late 2026 at the earliest. The studio is currently developing Marvel's Blade, which was already pushed from 2026 to late 2027. If Arkane Lyon closes, that project almost certainly disappears with it. The precedent isn't encouraging: Arkane Austin was shut down in 2024 with no successor project announced.
What's next for Xbox
Sharma has promised a leaner, more focused Xbox — but the definition of "focused" keeps shifting. She's trimmed Game Pass pricing in some markets and cut studios that depended on the subscription model for their audience. Meanwhile, Xbox is exploring in-game ad integrations that pause gameplay to serve ads, a move that has already drawn criticism from players. Whether this week brings official confirmation of new layoffs or another delay, the structural reset Microsoft began in July is clearly not finished.