Xbox To Lay Off 3,200 Workers, Every Studio Affected

July 6, 2026 - 17:16

The video game industry's recent wave of restructuring has now hit Microsoft's gaming division hard. Xbox has officially confirmed it will lay off approximately 3,200 workers, a move that impacts every studio under its umbrella. The cuts come as the company reorganizes following the finalization of its massive acquisition of Activision Blizzard earlier this year.

According to internal memos sent to staff, the layoffs primarily affect roles in the corporate and support functions, but development teams across Bethesda, 343 Industries, and the newly integrated Activision Blizzard teams are also seeing reductions. Studio heads have been asked to inform their teams individually over the next few days. The company stated that the decision was made to align its cost structure with the current business reality and to avoid duplication of roles following the merger.

This is not the first round of cuts for the Xbox brand this year. In January, Microsoft laid off 1,900 workers from its gaming division. The latest reduction brings the total number of employees let go from the gaming side in 2024 to over 5,000. While the company has promised severance packages and career transition services for affected employees, the scale of the layoffs has sent a chill through the industry, raising questions about the stability of large-scale game development even at the biggest publishers.