The $69 Billion Hangover: Every Xbox Layoff Since The Activision Blizzard Merger

Microsoft spent a large chunk of time--and cash--acquiring new studios throughout the 2010s and 2020s, but its biggest move was the $68.7 billion acquisition of Activision Blizzard in October 2023. Trumpeted as a deal that would greatly bolster its portfolio of first-party studios and further enhance the appeal of its Xbox Game Pass subscription service, the acquisition has been followed by several waves of restructuring since then.

Thousands of roles at the company have been cut, the plug has been pulled on several game projects, and several major studios have been shut down. Today's new round of cuts might feel like deja vu, and it's all part of Xbox CEO Asha Sharma's plan to "reset" the Xbox. Sharma has said that the Xbox business is "not healthy" thanks partly to risky bets, while Xbox Game Pass hasn't worked out as envisioned. This isn't the first time that Microsoft has slashed its Xbox employee headcount, but following the Activision Blizzard acquisition, the cuts have been deeper and far more frequent.

In case you need a reminder, here's a closer look at what Xbox has had to endure over the last couple of years.

January 2024

The first big wave of layoffs hit in January 2024, with 1,900 people out of 22,000 from Microsoft's video game division being cut from the company--almost 9% of all Xbox employees. At the time, head of Xbox Phil Spencer spoke about "the painful decision" to reduce the headcount, adding that it was done to create a "sustainable cost structure" across the company. Spencer said that areas of overlap were primarily affected.

One of the video game casualties of the layoffs was Blizzard's Project Odyssey, an unannounced survival MMO that would have been the studio's first original IP since Overwatch in 2016.

May 2024

Fast-forward to a few months later, and the next round of cuts at Xbox saw several of its studios shuttered. Arkane Austin (Redfall), Alpha Dog, and Tango Gameworks (Hi-Fi Rush) were all impacted, while mobile games developer Roundhouse Studios was merged with Zenimax Online Studios. At the time, Microsoft said that the closures were "tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games."

Exact numbers of staff who were let go weren't revealed at the time, but there was some good news--PUBG publisher Krafton acquired Tango Gameworks, and under a new agreement, the studio would continue developing the Hi-Fi-Rush IP and explore future projects.

September 2024

In yet another round of layoffs in 2024, 650 positions were impacted across corporate, support, and administrative roles.

July 2025

After several months of relative calm, the Microsoft axe swung downwards once again as part of a massive job loss at the corporation. Over 9,000 employees were laid off--around 4% of Microsoft's global staff--and Xbox was hit particularly hard with layoffs at multiple studios, game cancellations, and entire studio closures. Once again, Microsoft Gaming CEO Phil Spencer addressed the cuts and claimed these were necessary to allow for the "enduring success" of Xbox.

Some of the affected studios included Call of Duty developer Raven Software, Forza Motorsport developer Turn 10 Studios, which reportedly lost nearly 50% of its staff, Rare's long-in-development game Everwild was canceled, and a new MMORPG from The Elder Scrolls Online developer ZeniMax Online Studios, reportedly codenamed Blackbird, was also dropped. The hits didn't stop there either, as The Initiative was shuttered along with its first game, Perfect Dark, longtime Call of Duty co-developer High Moon Studios was impacted, Call of Duty co-developer Sledgehammer Games was hit with layoffs, and Blizzard announced that Warcraft Rumble support was winding down.

Finally, Halo Studios weathered staff reductions as it continued to work on multiple Halo projects, while John and Brenda Romero announced that an unspecified publisher--widely believed to be Microsoft--had canceled funding for their new game at Romero Studios.

July 2026

That brings us to today's new round of layoffs, which will see roughly 20% of Xbox's staff let go. This has already kicked off with 1,600 layoffs across the division, with another 1,600 people being affected throughout the current financial year. There have been broad cuts across all divisions within Xbox, while studios like Double Fine, Compulsion, Ninja Theory, and Undead Labs will exit Xbox. Double Fine and Compulsion will become independent developers once again and will retain all their IP, while Ninja Theory and Undead Labs will soon have new owners.

Arkane is also leaving the company, but it could be a while before the Marvel's Blade developer finds a new owner, as it has to go through a mandatory strategic review and consultation period with its Works Council in France.