Microsoft Xbox Layoffs Coming in Latest Cost-Cutting Move: Report

According to sources cited by Bloomberg, Microsoft is preparing its fourth significant reduction of personnel within the Xbox gaming division over the past 18 months.

The report claims that hundreds of roles will be eliminated as early as next week, primarily affecting Xbox’s sales and distribution teams. The scheduled layoffs follow a string of recent downsizing efforts:

• May 2025: Laid off 6,000 employees across various divisions
• Early June 2025: Another 300+ employees separated from the company .
• January 2024: Approximately 1,900 staff, including those in Activision Blizzard and Xbox, were let go
• September 2024: A smaller round of about 650 roles was eliminated

Microsoft acquired Activision Blizzard in late 2023 for $68.7 billion and has since been pushing to boost profitability, especially as it faces mounting investments in AI infrastructure, expected to reach roughly $80 billion this fiscal year.

Internal communications reportedly indicate that the layoffs will mainly impact sales operations, but could also include some central European offices where distribution networks are being streamlined. Microsoft’s management has privately briefed teams across the Xbox division, indicating that separating employees could occur as early as next week.

Despite major staff reductions and the closure of some studios, most notably Tango Gameworks, Arkane Austin, and Alpha Dog Games in 2024, Microsoft has emphasized that no game titles, hardware projects or active studios will be shuttered in this round.

The move marks the fourth major downsizing in Xbox since January 2024. While the division remains central to Microsoft’s gaming ecosystem, these cuts signal a shift from expansion post-Activision acquisition to ongoing consolidation and realignment.