Xbox could be about to shut down one of its game studios, as part of expected significant cuts reportedly taking place next month, it’s claimed.
On Wednesday, Xbox CEO Asha Sharma published a note sent to staff, in which she shared “realities that we need to navigate”, such as that its annual revenue has declined nearly half a billion in five years, hardware costs are up 4x since last year, and its studio system is “overextended”.
According to a Bloomberg report, the note to staff was sent in advance of planned significant layoffs across the Xbox business and a reduction to its marketing and other budgets.
In a new report published by The Verge, it’s claimed that those cuts could also see the closure of an unnamed Xbox studio. “Sources suggest the cuts could even involve a studio closure, or changes to the Xbox studio lineup,” it said.
If the layoffs go ahead, it will mark the fourth consecutive year of cuts at Xbox, as it weathers a challenging games market that has also seen tens of thousands of job losses across the wider industry.
Last year, Xbox closed Perfect Dark developer The Initiative, and in 2024, it closed Arkane Austin (Redfall, Prey), Alpha Dog Games (Mighty Doom), and Hi-Fi Rush developer Tango Gameworks (though the studio was later rescued by Krafton).
Xbox Game Studios includes The Coalition (Gears of War), Compulsion Games (South of Midnight), Double Fine (Kiln), Halo Studios, InXile (Clockwork Revolution), Mojang (Minecraft), Ninja Theory (Senua), Obsidian (Outer Worlds), Playground (Forza Horizon), Rare (Sea of Thieves), Turn 10 (Forza), Undead Labs (State of Decay), and World’s Edge (Age of Empires).
In her note published on Wednesday, Xbox CEO Sharma said she believed the platform holder had “not adequately funded” its biggest franchises, and that its studio system was “over extended”.
“At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.”
