Full Breakdown
Microsoft’s Ongoing Xbox Restructuring: Layoffs, Studio Shifts, and Game Pass Changes
By Drooid · · How we work
Xbox Restructuring Overview
The effort, described by insiders as the company’s “reset,” involves merging or moving first-party studios into Activision, reducing management layers, and refocusing on a smaller set of flagship franchises.
Studio Consolidations and Layoffs
Former Halo Studios now exists as a shell handling Halo Infinite and the recently released Halo: Campaign Evolved, while most of the original Halo team was let go. Other notable moves include:
- World’s Edge (Age of Empires) and Rare (Sea of Thieves) shifted under Activision control, with accompanying staff cuts.
- Turn 10 Studios and Playground Games (Forza Horizon) merged after Turn 10 was previously gutted.
- Obsidian was transferred to Bethesda Game Studios to work on a new Fallout entry.
The Coalition (Gears of War) and inXile (Clockwork Revolution) have already seen layoffs, and employees anticipate further cuts once their current projects ship.
Impact on Game Pass and Hardware
Game Pass continues to be adjusted: day-one titles have been removed from the Premium tier, and rumors suggest new subscription tiers—some with ads and without day-one releases—are in development. The service’s profitability is questioned after Microsoft lost $300 million in Call of Duty sales when that title was added to Game Pass.
Hardware concerns are evident as Grand Theft Auto VI pre-orders heavily favor the PlayStation 5, while Xbox hardware revenue has declined for three consecutive years and component costs have risen, casting uncertainty on the upcoming Project Helix console.
Official Statements & Responses
Former Xbox chief Phil Spencer warned that missteps with Halo could jeopardize the broader Xbox brand, a sentiment echoed by multiple current and former employees.