Xbox confirms 268 more layoffs and shifts studios under Activision and Bethesda

Reports say studio structures and management layers are also shifting: Rare and World’s Edge move under Activision, while Bethesda oversees Obsidian.
The exact breakdown of layoffs by team, and which studios may close, is still not fully clear.

What happened

Microsoft has confirmed a new round of layoffs at Xbox, affecting 268 jobs. The move is part of a broader restructuring within Microsoft Gaming, which is changing not only headcount but also the internal setup of studios and reporting lines.

According to reports, the impact is being felt across Halo Studios, other first-party teams, and the management and central functions layer of Xbox Game Studios. At the same time, some studios are being merged, and there are indications that certain parts may be closed, although those closures have not been fully specified.

As part of the same restructuring, Rare and World’s Edge are said to be moving under Activision. Playground and Turn 10 would continue together with a focus on Forza and Fable, while Bethesda is reportedly taking oversight of Obsidian. It is also reported that the next Halo game would be developed by Activision with a newly assembled team outside Call of Duty, though that detail has not been independently confirmed.

Timeline

July (year not specified in the source) — Xbox CEO Asha Sharma announces 3,200 layoffs as part of what she calls the company’s biggest restructuring; 1,600 would take effect immediately and another 1,600 later.
22 September 2026 — Eurogamer reports that Microsoft is carrying out another round of Xbox layoffs and that the restructuring also affects studio structures and reporting lines.
22 September 2026 — The same reporting outlines the new setup, with Rare and World’s Edge moving under Activision and Bethesda overseeing Obsidian.
22 September 2026 — The reporting also says the next Halo game would be made by Activision with a new team, but without separate official confirmation of that detail.

Background

This latest round follows earlier layoffs and reorganizations within Microsoft Gaming. In July, 3,200 jobs were already mentioned, with 1,600 immediate and 1,600 later. At the time, some first-party studios, including Double Fine and Compulsion Games, were also said to be operating more independently again.

The current reporting suggests Microsoft is continuing to adjust its internal structure, but it still leaves open which studios are being closed, how many jobs are being cut per team, and whether the new reporting lines are permanent.