A new report says Microsoft is in talks over a big Xbox studio reshuffle ahead of possible layoffs that could start on July 6, 2026. Obsidian Entertainment, Ninja Theory, Double Fine Productions, Compulsion Games, Undead Labs, and Arkane-connected teams are all named as part of discussions that could end in closure, a spin-off, a sale, or a move back to independence.
If that report is accurate, this is more than a routine reorg. Some of those teams might end up outside Microsoft altogether, even if they don’t shut down. The same report ties the push to cost cutting after Xbox allegedly spent $20 billion across five years, not counting Activision Blizzard, while annual revenue dropped by nearly $500 million. It also says new Xbox CEO Asha Sharma and chief content officer Matt Booty are pushing for a smaller setup that can hold up over time, with layoffs of as many as 1,000 staff possibly beginning July 6, 2026.
There’s also a bigger strategy shift in the report. Xbox appears to be pulling back from the older Game Pass approach, where the company would support everything from big AAA releases to stranger experimental projects, and leaning harder into safer picks like Halo, Forza, Call of Duty, The Elder Scrolls, and Fallout. That could put games like Marvel’s Blade and Ninja Theory’s Senua under a lot more pressure.
If you keep a close eye on Xbox, this is one to watch. Any official confirmation will likely come through Microsoft’s Xbox channels.
Author: Jesús Bosque
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