Xbox Layoffs Wave 2: 1,600 More Jobs Cut, Studios Restructured

Did you think Xbox's rough year was over? Unfortunately, it looks like the turmoil is far from finished.

According to a new report from The Information, the second wave of Xbox layoffs is about to hit. This follows the 1,600 job cuts that happened back in July, and it's all part of Microsoft's plan to slash 3,200 roles from its gaming division. That means another 1,600 people could be out of work soon, which is a tough pill to swallow for the industry.

But it's not just about layoffs. Prolific leaker NateTheHate claims that the Halo franchise is being moved over to Activision Blizzard, and similar reorganizations are expected across the board. If that pans out, 2026 is shaping up to be a year of massive changes for Xbox.

Since Asha Sharma took over the division, the mission has been clear: make Xbox more profitable. That "reset" initiative has already led to scores of job cuts and some major shakeups. Several first-party studios have left the building, with Double Fine Productions and Compulsion Games going independent again. Undead Labs (State of Decay 3) and Ninja Theory (Senua's Saga: Hellblade) have been sold off, and Arkane Lyon is looking to divest once it finishes a mandatory consultation with the French Local Works Council.

So what's left? Xbox is now doubling down on its biggest franchises. Bethesda recently confirmed that Fallout 5 and remasters of Fallout 3 and Fallout: New Vegas are in the works. But even as those big games move forward, studios like id Software and Zenimax Online have been hit hard by layoffs.

All of this is part of Microsoft's plan to shed approximately 20% of its Xbox workforce. It's a stark reminder of how volatile the gaming industry can be, even for the biggest players.

What do you think about these changes? Are you worried about the future of Xbox, or do you think this reset is necessary? Let us know in the comments.