Xbox is moving forward with a second major wave of staff reductions, reportedly cutting hundreds of roles this week as part of a broader organizational overhaul. According to reports from Rock Paper Shotgun, the layoffs are accompanied by plans to consolidate several of Microsoft’s internal game studios, marking a significant escalation in the division’s “Resetting Xbox” strategy.

The job cuts are the latest phase of a long-term reduction plan announced in July 2026 by Xbox CEO Asha Sharma. That initiative aims to eliminate a total of 3,200 positions across the gaming division by the end of the fiscal year in June 2027. Following the initial July wave, this week’s “hundreds” of additional cuts suggest the company is moving aggressively toward its final target.

Industry analysts and reports suggest that Blizzard Entertainment is particularly vulnerable in this round. While Blizzard remained relatively stable during the July reductions, staff reductions at the Irvine-based developer are now described as imminent. The restructuring comes at a time of shifting priorities for the studio, which recently saw the launch of several major expansions and is reportedly preparing for future hardware cycles.

Studio Consolidation and the Future of Halo

Beyond the headcount reduction, Microsoft is reportedly looking to streamline its development pipeline by merging several of its primary studios. While the specific names of the studios to be merged have not been confirmed, the move follows a pattern of decentralization seen earlier this year. In July, several former first-party studios—including Double Fine, Compulsion Games, Ninja Theory, and Undead Labs—either left the Xbox division or transitioned to independent status as part of the initial restructuring wave.

The consolidation efforts follow a period of mixed reception for major Xbox releases, including “Halo: Campaign Evolved,” and a broader industry correction that saw more than 14,000 jobs lost across the gaming sector in 2024. For Xbox, the current restructuring appears designed to prioritize core franchises like Call of Duty and Diablo while reducing the overhead associated with maintaining dozens of disparate development teams.

Microsoft has not yet issued a formal statement regarding the specific number of employees affected this week or which studios are currently slated for consolidation. However, the move reinforces the company’s stated goal of creating a leaner, more agile gaming organization before the start of the 2027 fiscal year.