CUTTING CORNERS: The first wave of massive layoffs that Microsoft teased several weeks ago has arrived. Most of the losses will hit the Xbox division over the next year as the company consolidates its gaming strategy. Microsoft will spin off Compulsion Games, Double Fine, Ninja Theory, and Undead Labs, while Arkane enters labor negotiations. Bethesda, ZeniMax, id Software, Activision, Obsidian, and Microsoft's accessibility team will all see deep cuts.
In a public memo to Xbox employees, CEO Asha Sharma confirmed that Microsoft will eliminate approximately 3,200 positions across the gaming division between now and July 2027, with 1,600 layoffs taking effect immediately. Other outlets report an additional 1,600 redundancies across other Microsoft divisions, bringing the total to 4,800.
No studios have been fully closed so far, and Sharma stressed that no publicly announced games have been canceled. Compulsion Games (which recently shipped South of Midnight) and Double Fine (Psychonauts) will become independent, retaining their intellectual property and receiving "runway" funding for their next projects.
Meanwhile, Microsoft will sell Ninja Theory (Hellblade) and Undead Labs (State of Decay) to new owners with the resources to finish Senua and State of Decay 3, respectively.
