Xbox Layoffs Continue: 268 More Cuts as Reset Hits Halo

Did you think the Xbox layoffs were finally over? Think again. Microsoft's big "reset" of its gaming business just entered its next chapter, and it's not pretty for the people behind your favorite games.

This week, Xbox announced another 268 layoffs, plus some major organizational changes. According to Xbox boss Matt Booty, this latest wave—combined with the cuts from July—means the company is now "roughly three-quarters of the way through" its planned restructuring. In plain English: the reset isn't done, and more layoffs are likely coming.

Let's do the math. Back in July, Xbox cut 1,600 people immediately, with another 1,600 planned by the end of Microsoft's fiscal year 2027 (June 30, 2027). That's 3,200 total. With 1,600 gone in July and 268 more now, that leaves 1,332 still to come. Even if Microsoft's accounting is fuzzy, one thing is clear: more staff reductions are on the way. In fact, reporter Jason Schreier said this month that layoffs at Blizzard—the studio behind Warcraft and Diablo—are coming imminently, right after BlizzCon.

So who got hit this time? The latest cuts touched Halo Studios, other first-party developers, and Xbox Game Studios management and central functions. The impact on Halo Studios looks significant. Booty confirmed that the next Halo game is being made at Activision, not Halo Studios. That's a huge shift for Xbox's flagship franchise.

Why is Microsoft doing this? Xbox CEO Asha Sharma, who took over from Phil Spencer this year, said the Xbox business was in an unhealthy place. She pointed to several factors: Microsoft's big bet on Game Pass not working out, and the shift away from exclusives (championed by Spencer and Sarah Bond) eating away at the business. Sharma also noted that while Microsoft spent more on teams, games, and services, its "core business weakened." On top of that, she called the current memory and component shortages—driven by the AI craze—the "most severe hardware crisis in its history." Ironically, Microsoft itself contributed to that crisis.

But here's the kicker: Microsoft is raking in money. It's the No. 4 most valuable company on Earth, worth close to $4 trillion. Last quarter alone, it brought in $90 billion in revenue and posted nearly $36 billion in net profit. Yet it's still cutting staff. Even CEO Satya Nadella acknowledged the weirdness, calling it "the enigma of success." That comment didn't sit well with everyone—one industry expert blamed "catastrophic mismanagement" and AI gambits for the cuts.

So what does this mean for you? If you're a Halo fan, the next game being made at Activision is a big deal. If you're a Game Pass subscriber, the service's struggles are part of why Xbox is reshaping itself. And if you're just watching the industry, this is another sign that even the biggest players are tightening their belts—while still posting record profits.

Will you be picking up the next Halo game, even with all this drama? What do you think about Microsoft cutting jobs while making billions? Let us know in the comments.