Asha Sharma and Matt Booty announced in July 2026 that they planned to lay off a total of 3,200 employees in the Xbox division next year. 1,600 people were laid off as part of the July wave. It has also been announced that 268 employees will leave in September. Meanwhile, Matt Booty stressed in a statement about Xbox’s ongoing reboot that the process is about 75% complete.
Jez Coden Windows Center In fact, fewer people may be fired from Xbox in July than originally planned.
In July, Microsoft announced plans to lay off about 3,200 people in its gaming division. The final number will be lower than initial estimates, sources said, as Microsoft prefers to reorganize and move employees to other divisions where possible.
In the same article, Corden noted that moving game studios between different divisions could benefit them and free them from the complexity of the company:
There is another corporate structure issue that Microsoft wants to solve. By separating some of its gaming teams from Microsoft, Microsoft can remove its employees from the company’s bureaucracy and corporate structure, potentially reducing overhead and costs.
From what I’ve heard, Halo Studios’ proximity to Microsoft’s headquarters has long been a source of corporate inertia and cost inflation – and it’s certainly not the fault of the people who work there. These employees and projects must also face the fact that artificial intelligence money will drive up the salaries of software engineering-related majors, making some game projects unable to survive simply because of the artificial intelligence bubble. The economy is in pretty weird shape right now.
Let’s recall that Microsoft pulled the Rare and World’s Edge teams out of Xbox Game Studios and moved the Rare and World’s Edge teams to Activision Blizzard.
