Xbox announced a significant overhaul of its business on July 6, which will see the company cutting 20% of its organization over the next 12 months. As part of that change, Xbox is parting ways with four studios, and potentially cutting a fifth down the line. Double Fine and Compulsion Games are once again going independent with runway funding from Microsoft, and taking their IP with them. Undead Labs and Ninja Theory have been sold to new buyers who have yet to be disclosed. Arkane Studios’ fate is up in the air as Xbox says the studio is reviewing its “potential strategic options.”
Less clear is the future of the studios still owned by Microsoft. Xbox is cutting 3,200 jobs as part of the move, with only 350 of them tied to the four studios it is divesting from. (That number doesn’t include Arkane Studios.) It’s currently unclear how the studios remaining under the Xbox umbrella will be impacted by the layoffs. In a post on Xbox Wire, CEO Asha Sharma only said that cuts will “vary in size” across its remaining teams. She also says that no games that those studios were working on have been canceled.
As the dust settles on a hard reset, we have some idea of what Xbox will look like going forward. The details are still hazy, but you can get a sense of what franchises Xbox will focus on based on the studios it is keeping open. Here’s what the lay of the land looks like right now, though note that the details of how many employees have been cut from the following studios are still unclear. This story will be updated as new information becomes available.
Xbox is cutting 4 renowned studios in major ‘reset’
New Xbox CEO Asha Sharma unveils plan for resetting the flailing gaming business
Activision
Xbox announced a significant overhaul of its business Monday, which will see the company cutting 20% of its organization over the next 12 months. As part of that change, Xbox is Considering that Microsoft acquired Activision Blizzard in 2023 for a final total cost of $75 billion, it’s safe to say that the publisher will remain an integral part of Xbox’s strategy going forwards. On the Activision side, the publisher is largely focused on Call of Duty right now, with most of the studios under its umbrella working on the series in some way. That includes Infinity Ward, Raven Software, Treyarch, and Sledgehammer Games. The series’ next game, Call of Duty: Modern Warfare 4, is scheduled to release on Oct 23. It will not be a day-one release on Xbox Game Pass, as Call of Duty: Black Ops 7 was in 2025.
Blizzard
It’s currently unclear how Blizzard has been impacted by the layoffs, though Sharma’s memo does seem to indicate the publisher will face cuts. At the moment, Blizzard is juggling several IPs including Overwatch, World of Warcraft, Hearthstone, and Diablo. Blizzard is still scheduled to host its dedicated convention, BlizzCon, on Sept. 12-13, so we should get more concrete details on the company’s future then.
King
The biggest shake-up from the Activision Blizzard side of Xbox has to do with Candy Crush developer King. The studio will now directly report to Sharma, alongside Mojang. It sounds as though King will be a major part of Xbox’s strategy going forward, per Sharma’s memo: “These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.”
Bethesda
Acquired by Xbox in 2021, Bethesda will also undergo some sizable changes as part of the layoffs. Arkane Studios is currently under Bethesda’s wing, so that’s one studio it will lose if it is sold or closed. Bethesda’s other studios will remain open, though some have reportedly been hit with severe layoffs. Bloomberg’s Jason Schreier initially reported that Doom studio Id Software and Elder Scrolls Online developer ZeniMax Online Studios cut a “significant number of staff” as part of the news. We have since learned that Id Software laid off over 90 workers, with Apogee founder Scott Miller claiming that the team lost “most (if not all) coders.” If that’s true, it will be a blow to the Id Tech engine that powers games like Doom: The Dark Ages. As for ZeniMax Online, sources told Kotaku that the studio’s development team may have been cut in half. The future of The Elder Scrolls Online remains unclear following the layoffs, at least according to a forum post by the game’s community manager.
There’s no word at present on cuts to Wolfenstein developer MachineGames or Starfield developer Bethesda Games Studio. Sharma’s confirmation that no games have been canceled would indicate that the latter is still working on The Elder Scrolls 6. What we do know at present is that Bethesda plans to focus on a few key franchises going forward: Doom, The Elder Scrolls, Fallout, Quake, and Wolfenstein. Don’t expect to see another swing at a new IP like Starfield anytime soon, if that’s the case.
The Coalition
As for teams remaining under the Xbox Game Studios banner, you can see Xbox’s focus tightening on a handful of IPs. The Coalition, the developer behind the Gears of War franchise, will continue working on the series. That’s no surprise given that Gears of War: E-Day is set to be one of Xbox’s big holiday games, and a proper exclusive for Xbox Series X consoles. It’s set to launch on Oct. 6.
Halo Studios
Also unsurprising is that Halo Studios is remaining at Xbox. The team is currently working on Halo: Campaign Evolved, a remake of the shooting series’ first game, and it is scheduled to release on July 28. The studio’s plans beyond that are unclear, though. Rumors are currently circulating that the team recently canceled an upcoming Halo multiplayer project codenamed Project Ekur. Xbox has yet to confirm that rumor publicly.
Mojang Studios
Minecraft is also likely to become a major priority for Xbox moving forward. (The series’ next game, Minecraft Dungeons 2, will launch on Sept. 29.) Developer Mojang Studios will now report directly to Sharma, just as King will. According to a report from Game File, Sharma believes that Sharma has been “massively underinvested.” Also significant is that Minecraft franchise vice president Helen Chiang has become Xbox’s first chief operating officer as part of the shake-up.
Obsidian Entertainment
Following a mistaken report last week that Obsidian Entertainment could face closure as part of Xbox’s layoffs, the studio remains open under the Xbox Game Studios banner. The team has been heavily impacted, though, according to reports. Sources told Kotaku that Obsidian lost between 60 and 70 employees in the layoff wave, accounting for 25% of the studio. That included senior talent spanning multiple departments, including writing and design.
Obsidian’s new role in Xbox is a mystery for now. The team isn’t actively working on an IP at the scale of Halo or Gears of War. Currently, it’s still working on updating Grounded 2 and an Outer Worlds 2 DLC, as reported by Kotaku, but we don’t know much about what it’s making beyond that. The important detail to remember here is that Obsidian developed Fallout: New Vegas, so it still has ties to a major franchise that Xbox has struggled to capitalize on as Bethesda Game Studios has been head down on The Elder Scrolls 6. We wouldn’t be surprised to learn Obsidian will be working on a new Fallout project, though nothing’s been made official at this stage.
Playground Games
Considering that Playground Games just launched a major hit in Forza Horizon 6, and will release Fable next year, it’s no surprise that Xbox is hanging on to the studio. Here’s a sobering detail, though: Playground Games is now the only studio remaining from Xbox’s 2018 expansion of its publishing efforts. At that year’s E3, Xbox announced that it had acquired Playground Games, Compulsion Games, Undead Labs, and Ninja Theory. That’s also where it announced that it was opening The Initiative, a studio that was shut down in 2025 as it was mid-development on a Perfect Dark reboot.
Turn 10 Studios
Even aside from Playground Games remaining at Xbox, it’s clear that Forza will be a priority franchise for the company in its next phase. Turn 10 Studios, the team behind the Forza Motorsport series, will remain at Xbox. Keep in mind, though, that Turn 10 already suffered a major blow during Xbox’s 2025 layoff wave. The team lost 70 employees and pivoted away from the Motorsport series to support Playground Games on the Forza Horizon series.
