Microsoft Restructures Xbox Again as 268 Jobs Are Cut and Studios Shift

Microsoft is continuing its Xbox restructuring, eliminating another 268 roles and making several changes to how its game studios and franchises are organised. The latest moves affect Halo Studios, Activision, Bethesda, Rare, Obsidian, Playground Games and Turn 10.

According toXbox’ss official restructuring update, the latest reductions are part of the reset announced earlier this year. Microsoft says the actions completed since July have taken the restructuring roughly three-quarters of the way to completion.

Activision Takes on More Xbox Franchises

One of the biggest changes is Activision’s expanded role. Microsoft says Activision will take responsibility for World’s Edge and Rare, while also developing the next Halo title through a new purpose-built team.

Halo Studios will retain a smaller team focused on supporting existing games and the Halo community. Rare, meanwhile, is moving under Activision while continuing its work on Sea of Thieves. Xbox’s latest Sea of Thieves update shows that Rare continues to operate the live game during the transition.

Obsidian Moves Under Bethesda

Obsidian Entertainment will move from Xbox Game Studios to Bethesda’s organisation while continuing work on its existing projects. Xbox says the studio will continue developing Grounded and a new Fallout project being made in collaboration with Bethesda Game Studios.

The change places Obsidian’s projects within Bethesda’s broader organisation rather than eliminating the studio or its current development work.

Playground Games and Turn 10 Are Combining

Playground Games and Turn 10 Studios are being brought together as one studio focused on the Forza and Fable franchises. Xbox says the two teams have worked as creative and franchise partners for more than a decade.

The move reduces the number of separate business units within Xbox while keeping the teams focused on their established franchises. Xbox’s restructuring announcement explains the change.

King and Microsoft Casual Games Also Combine

King will expand its remit to include Microsoft Casual Games, bringing the two organisations together around casual game development and live operations.

The move extends the restructuring beyond console franchises to Microsoft’s mobile and casual gaming operations.

The Cuts Follow a Larger Xbox Reset

The latest 268 role eliminations follow Microsoft’s much larger restructuring announced in July. Xbox CEO Asha Sharma said the company would reduce approximately 3,200 roles during fiscal 2027, including around 1,600 immediate role eliminations.

Microsoft’s July Xbox announcement said the company was reducing management layers, changing its content portfolio and reorganising operations. Microsoft also announced about 4,800 job eliminations across the company, with most concentrated in the Commercial and Xbox organisations. The company’s corporate announcement described the changes as part of a broader effort to align its workforce and investments with business priorities.

Some Studios Are Leaving Xbox

The restructuring also includes studio divestitures. Microsoft says Compulsion Games and Double Fine have returned to management with their intellectual property, back catalogues, and funding for future projects.

Undead Labs has also transitioned to new ownership and will continue work on State of Decay 3. Microsoft says the game will launch day one on Game Pass under its new publishing arrangement.

The situation is different for Ninja Theory. Xbox says two separate agreements for the studio fell through and that it will begin consultation with employees over a proposed closure while continuing to explore other options. Consultation involving Arkane remains ongoing.

Why Microsoft Is Changing Xbox

Microsoft says the restructuring is intended to simplify the organisation and concentrate investment on major franchises and areas where it can build a more sustainable gaming business.

In July, Xbox said its management structure had become too complex, with some parts of the organisation containing as many as 14 layers. The company said it intended to reduce management layers to no more than five, and where possible, three.

Microsoft has also reported weaker gaming revenue in some areas. In its fiscal 2026 fourth-quarter results, Xbox content and services revenue fell 10 per cent year over year, while Xbox hardware revenue also declined. Microsoft’s earnings release provides the company’s reported gaming figures.

What the Changes Mean for Xbox

The new structure places more franchises under fewer organisations. Activision is taking on additional teams, Bethesda is expanding its responsibilities, and several Xbox Game Studios teams are being combined or moved.

For players, the immediate impact is mainly organisational, not a change to existing games. Microsoft has not announced that the restructuring itself cancels its publicly announced lineup, although individual projects and staffing arrangements can change as the transition continues.

Key Changes

• Microsoft is eliminating 268 additional Xbox roles
• Activision will expand its remit to World’s Edge and Rare
• Activision will develop the next Halo title through a new purpose-built team
• Obsidian is moving under Bethesda while continuing its current projects
• Playground Games and Turn 10 are combining around Forza and Fable
• King is expanding its remit to include Microsoft Casual Games
• Compulsion, Double Fine and Undead Labs have moved or are moving to new management arrangements
• Xbox says the broader restructuring is roughly three-quarters complete

What Comes Next

Microsoft says the Xbox restructuring is roughly three-quarters complete, so additional organisational changes remain possible. The company is now focused on consolidating teams, reducing management layers and placing major franchises within fewer business units.

The longer-term effect will become clearer as the reorganised studios deliver their next games and Microsoft continues adjusting its approach to Xbox, Game Pass and publishing.