Xbox has confirmed a massive restructuring, with CEO Asha Sharma announcing that 3,200 layoffs will take place throughout FY27. Of that total, 1,600 employees have already been let go this week. The move marks a significant shift for the company's internal structure, resulting in the departure of several well-known studios.

Changes to Studio Ownership

In a major development, both Double Fine and Compulsion Games are now independent entities. Under the terms of this separation, both studios will retain full ownership of their existing IP libraries. This follows the recent release of Kiln and Keeper from Double Fine, and South of Midnight from Compulsion Games.

Other studios have shifted as well: Ninja Theory and Undead Labs have been acquired by new owners. This change in management means projects like State of Decay 3 and the new entry in the Senua series are expected to continue development under their new leadership.

The situation at Arkane remains uncertain. While Arkane Lyon continues work on Marvel’s Blade, reports indicate the project is over budget and behind schedule. The studio is currently in negotiations with French financial bodies to determine its next steps following the previous closure of Arkane Austin.

Impact Across Remaining Xbox Studios

The recent gaming layoffs have hit studios still under the Xbox umbrella particularly hard, with hundreds of developers losing their jobs. Teams at Obsidian Entertainment, id Software, and Bethesda Game Studios have been significantly reduced, raising concerns about the expertise available for current and future projects.

Key projects currently in development include:

  • Halo Studios: Transitioning away from the Reclaimer Trilogy and Halo Infinite, the team is preparing the launch of Halo: Campaign Evolved, an Unreal Engine 5 remake of the original title.
  • The Coalition: Nearing the release of Gears of War: E-Day this October.
  • Playground Games: Continuing support for Forza Horizon 6 and finalizing Fable, which is slated for a February 2027 release.
  • MachineGames: Returning to the Wolfenstein series for Wolfenstein 3 following the success of Indiana Jones and the Great Circle.
  • InXile Entertainment: Developing the upcoming Clockwork Revolution.

Other studios, such as Turn 10, have moved into support roles for other internal projects like Fable, while Rare remains focused on Sea of Thieves. Zenimax Online Studios, responsible for The Elder Scrolls Online, also saw significant staff reductions this week, casting doubt on the long-term support for the long-running MMO.

With The Elder Scrolls 6 reportedly still two or more years away, Bethesda Game Studios faces the challenge of maintaining its development pace following what sources describe as the most extensive cuts among the internal Xbox teams.