Xbox prepares second layoff round in 2026, Eurogamer reports

• The report also says Microsoft wants to merge several Xbox studios, but it does not name which teams are involved.
• The news follows a major restructuring in July 2026, when the article says 1,600 jobs were cut.

What happened

Eurogamer, citing an exclusive report from The Information, says Microsoft is once again cutting into its gaming division. The source was reportedly briefed on plans to lay off hundreds of Xbox employees this week. Microsoft has not publicly confirmed those plans, so for now these are reported intentions rather than an officially announced reorganization.

According to the same report, Microsoft also wants to consolidate several Xbox studios. The publication does not name the studios involved, so it is unclear which teams would be affected. The report frames the move as part of a broader push to steer Xbox back toward profitability. In the supplied coverage, that is tied to a reassessment of the game business, with Microsoft said to be focusing more heavily on the division’s biggest franchises.

If accurate, the new round would be the second layoff wave of 2026. Eurogamer links the expected move to the restructuring in July 2026, when the article says 1,600 jobs were cut and nearly the entire Xbox studio portfolio was affected, though some teams were hit harder than others. In that same context, the article also says Microsoft had previously indicated it wanted to cut another 1,600 jobs within about a year.

The current reporting leaves several details open. It is not known how many of the planned layoffs will actually happen, whether the studio consolidation is tied to sales transactions, or whether other organizational changes are also being prepared. Microsoft has not yet issued a public statement on the matter.

Background

In Eurogamer’s background section, Xbox CEO Asha Sharma is described as the driving force behind Microsoft’s renewed focus on its gaming business. The article says Sharma had previously indicated that Microsoft wanted to cut another 1,600 jobs within about a year. It also says Microsoft wants to focus more on its biggest franchises, including The Elder Scrolls and Fallout. That suggests a strategy that places less emphasis on a broad studio portfolio and more on a smaller number of major brands.

The earlier restructuring in July 2026 reportedly affected Bethesda, ZeniMax Online, and id Software, among others. Eurogamer also says Double Fine Productions and Compulsion Games bought back their independence, while Ninja Theory and Undead Labs were sold to unnamed buyers. Arkane Lyon was still in consultation, and the outcome was unknown at the time. That mix of layoffs, studio spin-offs, and possible sales shows that the reorganization was not just about reducing headcount, but also about reshaping the Xbox studio lineup more broadly.

The new report fits that same pattern. Because Microsoft has not confirmed the plans, it remains unclear whether the expected second round will follow the same structure as the July move. It is also still unknown which studios may be merged and whether that would involve a formal sale, a spin-off, or an internal reshuffle. The supplied sources do say the move is meant to make Xbox profitable again, but they do not provide concrete figures for revenue, cost savings, or the timing of any expected results.

Related GAME-scanner articles

• Xbox layoffs and studio consolidation mentioned in Reddit post from 22 September 2026, without official confirmation

Sources

• Eurogamer: https://www.eurogamer.net/xbox-second-wave-cuts-layoffs-report