Xbox is reportedly gearing up for a second round of layoffs this week, as reported by The Information.
An inside source has revealed that the company is set to “consolidate several of its game studios” as part of its ongoing restructuring efforts.
According to VGC, this may involve mergers or internal changes within Xbox Game Studios, Bethesda, Activision, and Blizzard.
Xbox had initially announced plans to lay off 3,200 employees back in July. The first round of layoffs resulted in 1,600 job cuts, including significant losses at Obsidian, Bethesda, Id Software, and Zenimax Online Studios.
The platform holder divested five internal studios: Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs, and Arkane.
Compulsion Games and Double Fine became independent entities. Ninja Theory and Undead Labs are in the process of being acquired, while Arkane Lyon has entered a consultation phase.
Xbox CEO Asha Sharma stated that the restructuring was necessary because the company had “spread itself too thin.”
“In order to grow, we took various risks. However, in doing so, we lost focus on our core business,” Sharma explained. “The true measure of our strategy lies in where we allocate our resources, and unfortunately, we overextended ourselves.”
In a memo to staff, Sharma highlighted that platform teams had expanded by 40% since the beginning of the current hardware generation, while the player base and overall playtime had decreased.
Sharma outlined plans to streamline management layers to five, addressing concerns about some teams having up to 14 layers of management.
“As Xbox expanded, we became more fragmented,” said Sharma. “Teams, studios, and functions began operating independently, making it challenging to work towards a common goal, make necessary tradeoffs, and accomplish tasks efficiently.”
Sharma concluded by stating, “These changes are aimed at a bigger future for Xbox, not a smaller one. I envision Xbox as one of the few companies that entertains over a billion people daily, offering everyone the chance to create and connect.”
“I am confident that we can achieve this objective. Xbox has been a beloved entertainment franchise with talented studios worldwide, and we are poised for growth in 2027,” Sharma added.
Earlier this month, Xbox announced its decision to publish Kojima Productions’ upcoming title Physint after Sony unexpectedly withdrew from the project in mid-June.
Sharma described the new collaboration between Kojima Productions and Xbox as “a significant milestone” for the company.