Microsoft’s Xbox division has confirmed a major restructuring that will result in 3,200 employee redundancies and the transition of four studios out of Xbox Game Studios.
The move is part of what Xbox leadership is calling a broader “reset” intended to sharpen focus across its gaming businesses.
According to Xbox communications, 1,600 roles will be eliminated immediately with a further 1,600 reductions occurring over the next 12 months.
As part of the restructuring, none of the affected development studios will be shut down outright.
Double Fine, best known for titles such as Psychonauts 2 (released 2021), and Compulsion Games, developer of We Happy Few (2018) and the announced South of Midnight, will be returned to independent status and will retain their intellectual property, with Xbox providing runway funding for their next projects.
Ninja Theory (Hellblade: Senua’s Sacrifice, 2017; DmC: Devil May Cry, 2013) and Undead Labs (State of Decay, 2013; State of Decay 2, 2021) are reported to be entering agreements to join new owners, with commitments to fund completion of their ongoing projects, specifically Senua and State of Decay 3 development efforts.
Arkane — the studio behind Dishonored (2012) and Prey (2017) — is said to be in talks to review strategic options.
Xbox CEO Asha Sharma has said the cuts affect numerous areas across Microsoft’s gaming portfolio, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios.
Sharma also stated that none of Xbox’s publicly announced first‑party titles have been cancelled.
She confirmed that Mojang (developer of Minecraft, initially released in 2011) and King (publisher of Candy Crush Saga, released 2012) will now report directly to her.
In a message outlining the company’s strategy, Sharma framed the changes as a way to invest more deliberately: she wrote that Xbox will invest as much as ever but “with greater focus, greater discipline, and greater clarity,” with the goal of making Xbox a platform where people both play and create.
She expressed confidence that these actions will enable Xbox to return to growth by 2027 and warned against confusing longevity with inevitability.
The announcement underscores the shifting economics of AAA development and platform strategy across consoles and PC.
Xbox’s restructuring will be watched closely by the industry and players alike as studios navigate independence, new ownership, and the challenges of shipping high‑profile titles across platforms that include Xbox Series X/S, PlayStation, Windows and, increasingly, hybrid consoles such as Nintendo Switch.
The move is part of what Xbox leadership is calling a broader “reset” intended to sharpen focus across its gaming businesses.
According to Xbox communications, 1,600 roles will be eliminated immediately with a further 1,600 reductions occurring over the next 12 months.
As part of the restructuring, none of the affected development studios will be shut down outright.
Double Fine, best known for titles such as Psychonauts 2 (released 2021), and Compulsion Games, developer of We Happy Few (2018) and the announced South of Midnight, will be returned to independent status and will retain their intellectual property, with Xbox providing runway funding for their next projects.
Ninja Theory (Hellblade: Senua’s Sacrifice, 2017; DmC: Devil May Cry, 2013) and Undead Labs (State of Decay, 2013; State of Decay 2, 2021) are reported to be entering agreements to join new owners, with commitments to fund completion of their ongoing projects, specifically Senua and State of Decay 3 development efforts.
Arkane — the studio behind Dishonored (2012) and Prey (2017) — is said to be in talks to review strategic options.
Xbox CEO Asha Sharma has said the cuts affect numerous areas across Microsoft’s gaming portfolio, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios.
Sharma also stated that none of Xbox’s publicly announced first‑party titles have been cancelled.
She confirmed that Mojang (developer of Minecraft, initially released in 2011) and King (publisher of Candy Crush Saga, released 2012) will now report directly to her.
In a message outlining the company’s strategy, Sharma framed the changes as a way to invest more deliberately: she wrote that Xbox will invest as much as ever but “with greater focus, greater discipline, and greater clarity,” with the goal of making Xbox a platform where people both play and create.
She expressed confidence that these actions will enable Xbox to return to growth by 2027 and warned against confusing longevity with inevitability.
The announcement underscores the shifting economics of AAA development and platform strategy across consoles and PC.
Xbox’s restructuring will be watched closely by the industry and players alike as studios navigate independence, new ownership, and the challenges of shipping high‑profile titles across platforms that include Xbox Series X/S, PlayStation, Windows and, increasingly, hybrid consoles such as Nintendo Switch.
