Microsoft is laying off 268 Xbox staffers and Ninja Theory may close

Microsoft is laying off around 260 Xbox employees today, as part of an ongoing “reset” of its gaming business. 1,600 Xbox employees were impacted by layoffs in July, with Xbox CEO Asha Sharma describing the cuts as “the most significant restructure in Xbox history.” Today’s layoffs are part of the 3,200 roles that were previously confirmed to be impacted over the course of Microsoft’s 2027 financial year (which ends in June 2027).

“We are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer,” says Xbox chief content officer Matt Booty in a memo. “The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring. I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them.”

The Xbox restructuring also includes Microsoft selling off four Xbox studios as part of its significant gaming cuts. While two studios, Double Fine and Compulsion Games, have already gone independent, deals to sell off Ninja Theory have fallen through. As a result, Microsoft is now proceeding with a consultation period to close the studio, unless the company can find another buyer.

“Unfortunately, two separate agreements for Ninja Theory fell through,” explains Booty. “We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.”

The deal to sell off Undead Labs is still proceeding, and Booty says it has “now successfully transitioned on similar terms” to Compulsion and Double Fine. Xbox is also still in consultations over the future of Arkane and the Blade game, in accordance with French labor laws. “Consultation with Arkane remains underway and is expected to continue through the end of the year,” says Booty.

Today’s Xbox layoffs are also part of a larger reorganization of Xbox today. Activision is taking on the Halo franchise, alongside Sea of Thieves and World’s Edge, the studio responsible for Age of Empires. You can read more about the latest Xbox shake-up right here.