Xbox cuts 3,200 jobs, sells off five studios

Xbox announced it's cutting 3,200 jobs across fiscal year 2026 and divesting five studios, according to Gematsu. Microsoft hasn't named which studios are being sold or shut down, and the company didn't specify whether first-party teams working on Xbox Game Pass titles are included in the cuts.

The restructuring comes two years after Microsoft's $69 billion Activision Blizzard acquisition closed. That deal added thousands of employees to Xbox's payroll, but also triggered multiple rounds of layoffs across the combined org. This round is larger than the 1,900-person reduction Xbox made in early 2024.

For PC players, the immediate concern is Game Pass library stability. If any of the divested studios were mid-development on Game Pass day-one titles, those projects could get delayed or canceled outright. Microsoft hasn't said which five studios are on the block, so there's no way to know yet if this affects anything you're waiting on.

Worth checking BetterFPS for updates if you're subbed to Game Pass — we'll flag any confirmed cancellations or delays as they surface.