Xbox Reset Continues with Massive Layoffs and Studio Shakeup

Xbox has been plagued by turmoil for at least two years, and this week was no exception. Microsoft cut 268 jobs in its gaming division, shuffled major studios and franchises around, and continued its Xbox 'reset.' Layoffs have become a norm for Xbox employees, with thousands let go in early 2024.

The latest round of layoffs particularly affected Halo Studios, which will be left as a shell after years of leadership changes and technical shifts. The next Halo game was reportedly years away from shipping, leading Microsoft to pull the plug instead.

Other studios, including World's Edge and Rare, are also undergoing significant changes. Some employees have expressed relief at being laid off, while others feel anger or confusion. Former head of World's Edge Shannon Loftis criticized Xbox chief Asha Sharma for her handling of the situation, saying that it was 'super funny' to promise clarity as kindness.

Loftis believes that Microsoft has squandered everything: talent, IP, time, money, gamers, community, goodwill, brand equity, stable services, profitability, and knowledge. Analyst Mat Piscatella also expressed concern about the cuts, saying that they 'aren't cuts a serious business makes.'

The changes are part of Sharma's 'most significant restructure in Xbox history,' aimed at making the company easier to spin off or operate as a subsidiary. The focus is on larger franchises and getting bigger games out quicker and at less cost.