Xbox Restructures After Spreading Too Thin, Closes Studios and Cuts Thousands

Thousands of Xbox employees have been laid off, with roughly half of id Software's team affected, impacting workers across multiple game studios.

In mid-2026, Microsoft's Xbox division announced one of the most sweeping contractions in its history, eliminating thousands of jobs and closing multiple game studios after years of aggressive expansion stretched the organization beyond its capacity to execute. Leadership acknowledged that overcommitment — across studios, platforms, and a costly cloud-streaming strategy that never found its market — had diluted focus rather than built dominance. The restructuring is framed as a recalibration toward fewer, higher-impact endeavors, though for the thousands who lost their livelihoods, it register

Xbox Restructures After Spreading Too Thin, Closes Studios and Cuts Thousands

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