Another round of cuts leaves big questions over the future of Game Pass and the Xbox platform.
Another round of cuts leaves big questions over the future of Game Pass and the Xbox platform.
by Tom Warren Sep 24, 2026, 12:00 PM EDT
It feels like Xbox has been in a permanent state of turmoil for at least two years now, and this week is no different. Microsoft cut 268 jobs across its gaming division this week, shuffled major studios and franchises around, and continued its Xbox “reset.”
Layoffs have become a way of life for Xbox employees, after Microsoft started cutting thousands in early 2024 and hasn’t slowed down. The turmoil was particularly apparent when Microsoft started shutting down game studios, and the painful layoffs have had a lasting impact on morale, according to current and former Xbox employees I’ve been speaking to this week.
At the same time, Xbox hardware is under pressure, Game Pass keeps being reshaped, and the future of Xbox as a brand feels more uncertain than ever before. This week was also a reminder that Microsoft is still very much in the middle of figuring out Xbox’s future.
Nothing demonstrates the scale of change going on inside the Xbox organization than Halo. “If we lose our way with Halo, we lose our way with Xbox,” said former Xbox chief Phil Spencer in 2011. It’s been clear for years that Microsoft has lost its way with Halo, and the company has definitely lost its way with Xbox.
Instead of moving the Halo Studios team under Activision directly, Microsoft is laying off most of the studio after years of layoffs, leadership changes, and technical shifts.
