Xbox could be about to close one of its studios as part of cuts, it’s claimed

June 11, 2026 - 05:36

The Xbox division of Microsoft is reportedly bracing for a significant round of layoffs, with speculation mounting that at least one of its game development studios could be shut down entirely. According to sources familiar with the matter, the cuts are part of a broader cost-reduction effort within the company's gaming arm, which has seen massive spending in recent years through acquisitions like Activision Blizzard.

While Microsoft has not made an official announcement, internal chatter suggests the restructuring could hit multiple teams. The potential closure of a studio has raised particular concern among industry watchers, as it would mark another blow to a sector already battered by widespread downsizing in 2024. Xbox has not confirmed which studio might be affected, but rumors point to smaller teams that have struggled to deliver successful titles or fit into the company's long-term strategy.

This news comes just months after Microsoft laid off 1,900 employees from its gaming division, primarily from Activision Blizzard and ZeniMax. The company has also closed several studios in the past, including Tango Gameworks and Arkane Austin earlier this year. If these latest reports hold true, it would signal that even the deep pockets of Microsoft are not immune to the ongoing industry contraction. Fans and developers alike are now waiting for an official statement, hoping for clarity on which teams and projects will survive the next wave of cuts.