Microsoft Cuts 268 Xbox Jobs, Ninja Theory Sale Collapses

Microsoft is laying off 268 Xbox employees, the company confirmed Tuesday, as part of what it calls a continuing "reset" of its gaming division. The cuts follow a collapsed effort to sell Ninja Theory, the studio behind "Hellblade," whose future now looks uncertain, The Verge reported.

How many Xbox employees are being laid off?

Microsoft is cutting 268 roles across Halo Studios, other first-party studios, and Xbox Game Studios management and central functions, according to a memo from Xbox chief content officer Matt Booty cited by The Verge. The reductions add to a July round that hit 1,600 Xbox employees.

What happened to plans to sell Ninja Theory?

Deals to sell off Ninja Theory fell through over the summer, per The Verge. The studio's status going forward was not detailed in Booty's memo, leaving open the possibility of a closure. Ninja Theory developed "Senua's Saga: Hellblade II" under Xbox Game Studios.

How does this connect to Microsoft's broader Xbox restructuring?

Booty's memo places Tuesday's cuts inside a larger plan. Microsoft had previously confirmed that 3,200 roles would be affected across its 2027 financial year, which ends in June 2027. "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring," Booty wrote, according to The Verge.

In July, Xbox CEO Asha Sharma described that earlier wave of cuts as "the most significant restructure in Xbox history," The Verge reported.

What did Microsoft say about the layoffs?

Booty's memo struck a somber tone. "I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them," he wrote, per The Verge.

"I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them." — Matt Booty, Xbox chief content officer

By the numbers

• 268 — Xbox roles cut in Tuesday's layoffs, spanning Halo Studios, other first-party teams, and XGS management functions
• 1,600 — Xbox employees affected in the July round of cuts
• 3,200 — Total roles Microsoft previously said would be impacted across its 2027 financial year, which runs through June 2027

What's next for affected Xbox studios?

The Verge's coverage notes the layoffs are part of a wider pattern of changes across Xbox Game Studios this year, including Activision taking over Halo development duties and Xbox merging its Forza teams into a single studio. Undead Labs was also named among studios affected by the broader restructuring, according to The Verge's reporting.

Microsoft has not said whether Ninja Theory will be shut down outright or restructured further. The company's memo frames Tuesday's cuts as progress toward completing the restructuring plan announced earlier this year, with roughly three-quarters of that plan now executed, per Booty's account to staff.

For employees losing their jobs, Microsoft has not detailed severance terms or transition support in the material reviewed by The Verge. The company's public statements have focused on the scale and sequencing of the cuts rather than individual support programs.

The reductions land the same week Microsoft has drawn attention for other corporate moves, though the Xbox restructuring stands as a distinct, ongoing process tied specifically to the gaming division's cost structure and studio portfolio.

Readers can review Booty's memo language and the full account of Tuesday's cuts, including detail on which studios and functions are affected, in The Verge's original report.

What other studio changes has Xbox made this year?

The layoffs arrive alongside a series of studio-level shifts at Xbox Game Studios. Activision has taken over development duties for Halo, according to The Verge's reporting, shifting work away from the newly renamed Halo Studios structure that had previously handled the franchise internally. Xbox has also merged its Forza development teams into a single studio, consolidating operations that had been split across multiple internal groups.

Undead Labs, the studio behind the "State of Decay" series, is also named among the teams affected by the broader restructuring, per The Verge. The outlet frames these moves collectively as part of Xbox's ongoing "reset," a term Microsoft has used across its public statements about the gaming division's cost-cutting and reorganization since the July layoffs began.

Microsoft has not published a comprehensive list of which specific teams or titles will be affected by each individual studio change, and Booty's memo, as reported by The Verge, does not name every studio beyond confirming the departments losing roles in Tuesday's cuts.

Is Xbox done cutting jobs?

Booty's memo puts the company at roughly three-quarters of the way through the restructuring plan announced earlier in 2026, according to The Verge. That leaves a remaining portion of the previously confirmed 3,200-role total still to be executed before Microsoft's 2027 fiscal year closes in June 2027. The memo does not specify a timeline for when the remaining cuts will land or which divisions they will target.