Xbox CEO, Asha Sharma, has announced a significant restructuring of Xbox, leading to 3,200 employees being laid off, and five studios being affected by the year-long reset.
In an email sent to all Xbox employees and subsequently released on X, Sharma says, “Our business today is not healthy.” The Xbox strategy has been to bet on Game Pass, multi-platform, and a broader portfolio of content, but according to Sharma, they have not grown at the expected pace.
All studios impacted by the Xbox reset
Compulsion Games, the creators of South of Midnight, and Double Fine Productions, best known as the developers of Psychonauts, will become independent studios with their IP and catalogue.
Ninja Theory and Undead Labs are also impacted and have entered terms to join new ownership with funding to complete Senua and State of Decay 3, respectively.
As for Arkane Lyon, the studio’s management has started consultation with its Works Council in France to review all its options. Arkane Lyon is working on a Marvel’s Blade game, but further details about the team’s future are expected to be announced at a later date.
Reductions are expected across the board, and as part of the restructuring, investments will focus on projects that are considered by Xbox to be higher-priority. As stated by Sharma, these changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. At this time, no first-party publicly announced games have been cancelled as a result of these reductions.
Since further layoffs have been confirmed throughout Fiscal Year 2027, Xbox isn’t out of the water just yet.
Consider checking out more from Xbox and its studios:
Halo: Campaign Evolved physical edition comes with a disc | Bethesda’s Todd Howard provides update on Marvel’s Blade development | Call of Duty: Warzone shutting down on PS4 and Xbox One later this year |
