Microsoft is laying off 268 Xbox employees today, continuing a major restructuring of its gaming operations that has already affected 1,600 staff since July. The cuts are part of a broader "reset" of the Xbox business, with Microsoft describing it as the most significant restructure in the company's gaming history.

The layoffs affect Halo Studios, other first-party studios, and management functions, and form part of 3,200 planned redundancies by June 2027. Microsoft is also divesting four studios: Double Fine and Compulsion Games have already become independent, Undead Labs is being sold, and Ninja Theory faces closure after two sale agreements fell through, unless a new buyer emerges. Arkane Studios remains in ongoing consultations regarding its future. Meanwhile, Activision is assuming control of the Halo franchise, Sea of Thieves, and World's Edge studios.