# Xbox reset gets ugly

> Microsoft cuts 268 jobs and reshuffles studios, leaving Game Pass and hardware strategy in doubt.
- Title: Xbox reset gets ugly · The Verge | Shortify
- Summary: Microsoft cuts 268 jobs and reshuffles studios, leaving Game Pass and hardware strategy in doubt. Microsoft is three-quarters through a major Xbox…
- Keywords: microsoft, xbox, layoffs, game pass, halo studios, activision, first-party studios, xbox hardware, asha sharma, gaming industry, studio restructuring, technology
- Source: The Verge — https://theverge.com/tech/999919/microsoft-xbox-reorganization-activision-notepad
- Author: Tom Warren
- Published: 2026-09-24T16:00:00+00:00
- Read time: 2 min
- Topics: microsoft, xbox, layoffs, game pass, halo studios, activision, first-party studios, xbox hardware, asha sharma, gaming industry, studio restructuring, technology
## 268 jobs cut this week
Microsoft laid off 268 gaming division employees and shuffled major studios and franchises as part of its ongoing Xbox reset. Layoffs have become routine since early 2024.
## Halo Studios mostly shut down
Most of Halo Studios was laid off after years of turmoil. A skeleton crew remains to maintain Halo Infinite and Halo Campaign Evolved, while the next Halo game was cancelled.

> If we lose our way with Halo, we lose our way with Xbox.
## Employees blindsided by cuts
Some Halo Studios staff waited hours to learn if they were laid off, finding out first through a public Xbox blog post. Reactions ranged from relief to anger and confusion.

> Promoted and laid off in the same week is pretty wild.
## Studios moved to Activision
World's Edge, Rare, and other studios are being moved under Activision control. Forza developers Turn 10 and Playground Games are merging into one studio.
## Obsidian joins Bethesda
Obsidian Entertainment is being moved out of Xbox Game Studios and placed under Bethesda Game Studios, where it will work on a new Fallout game.
## First-party studios gutted
Xbox once had 15 dedicated first-party studios. Now only Playground Games, The Coalition, and inXile remain, with most others moved to Activision or shut down.
## More cuts likely coming
Employees expect The Coalition and inXile will face layoffs once their current games ship. Microsoft already started cutting The Coalition this week.
## Game Pass strategy unclear
Microsoft has constantly tweaked Game Pass, adding and removing Call of Duty and changing pricing. The service lost 300 million dollars in Call of Duty sales.
## Day-one games disappearing
With fewer first-party studios, Microsoft will likely reshape Game Pass again. Rumors suggest new tiers with ads, no day-one games, and family plan options.
## Hardware sales declining
Xbox hardware revenue has fallen for three straight years. Grand Theft Auto Six preorders heavily favor PlayStation 5, signaling trouble for the platform.
## Next console uncertain
Rising memory costs are pushing Xbox Series X prices higher. The future of Project Helix, Microsoft's next-generation console, is increasingly hard to predict.
## Restructure 75 percent done
Microsoft says it's three-quarters through the Xbox restructuring, meaning more layoffs and upheaval are coming for remaining employees.
## Strategy remains a mystery
Despite months of cuts and reshuffles, Microsoft's long-term Xbox strategy is still unclear. The company appears to be figuring it out as it goes.

> These aren't cuts a serious business makes, in my opinion.
## Key takeaway

Microsoft is three-quarters through a major Xbox restructure that's gutting first-party studios and reshaping Game Pass, but the endgame remains unclear.