Xbox expected to execute second wave of 2026 layoffs and studio consolidations this week

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Xbox is preparing to lay off several hundred additional employees and consolidate studio structures this week, according to a report by The Information. The upcoming cuts will complete a major restructuring initiative aiming for 3,200 total job reductions in 2026.

Restructuring timeline and July background

• July Phase 1 Cuts: In July 2026, Xbox announced roughly 1,600 layoffs and separated from studios including Double Fine, Compulsion Games, and Undead Labs.
• Two-Part Strategy: Xbox previously explicitly framed the July reductions as the first phase of a broader restructuring process, signaling that a second wave would follow shortly after.

Impacted divisions and studio outlook

• Publishing Consolidations: The new reductions are expected to consolidate publishing operations across Xbox Game Studios, Bethesda, Activision, and Blizzard, primarily affecting marketing, sales, distribution, and related corporate functions.
• Studio Reductions: Additional staff cuts may affect individual development studios identified as low-performing.
• Arkane Lyon Status: The upcoming moves are expected to clarify the future of Arkane Lyon (Marvel’s Blade), which was placed on Microsoft’s list of potential divestments in July.
• Halo Studios: Unconfirmed rumors suggest major organizational changes may also occur at Halo Studios, though specific details have not yet been disclosed.

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Amanda Torati

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Amanda Torati is a linguist and postgraduate researcher who specializes in the intersection of storytelling and interactive media. With a deep fascination for the gaming ecosystem, she focuses on deconstructing game narratives and technical trends to make them accessible to players of all levels. At ABWaves Game, Amanda combines her academic background with in-depth research to deliver reviews and guides that are both precise and engaging, ensuring readers stay informed in a fast-paced digital world.

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