Xbox Cuts 268 Jobs in Third 2026 Layoff Wave, Halo Studios Hit

Microsoft’s Xbox division eliminated 268 jobs on September 22, 2026, in the third round of layoffs to hit the gaming unit this year, with cuts landing across Halo Studios, other first-party studios, and Xbox Game Studios management and central functions.

The reduction was confirmed on September 22 and reported widely on September 23, according to multiple outlets covering the internal notice sent to staff. Microsoft framed the move as part of a broader “reset” of its gaming organization, following an earlier 2026 restructuring plan that had already targeted 3,200 roles across the year, with 1,600 of those cuts executed before this latest wave.

Direct Answer: What Happened and Who Is Affected

Xbox confirmed 268 layoffs on September 22, 2026, affecting staff at Halo Studios, other first-party development teams, and Xbox Game Studios’ management and central functions layer. The cuts are the latest step in a year-long restructuring effort that began with a 1,600-role reduction earlier in 2026 and is now reported to be roughly 75 percent complete. Game Informer reported the September reductions as an addition to the previously announced 1,600-role wave, while separate Washington state filings tied to Xbox’s 2026 layoffs show hundreds more positions eliminated in the Redmond area.

Key Numbers From the Latest Cuts

How we know: figures are drawn from Microsoft’s internal restructuring update as reported by outlets tracking the Xbox layoffs, alongside a Washington state WARN Act notice tied to the 2026 cuts. Where a source gave an approximate figure, that is noted as such.

Halo Studios and the Shift to Activision Oversight

The most significant structural change accompanying the layoffs is not the headcount reduction alone but a reported shift in how Microsoft’s flagship franchise will be developed going forward. Bloomberg reported that Activision, which Microsoft acquired for $69 billion in 2023, will take on development duties for the next Halo title, and will also oversee Rare and World‘s Edge. That change places two more of Xbox’s storied first-party studios under an Activision-led structure at the same time Halo Studios itself is absorbing job cuts.

Xbox has not published a standalone statement quoting an executive on the September 22 cuts specifically, but the internal messaging described to reporters characterizes the reductions as continued execution of the “Resetting Xbox” plan first outlined in a July 2026 internal memo. That memo underpins the WARN notice covering 605 jobs effective September 4, 2026, of which 493 were based directly in Redmond, Washington — Microsoft’s Xbox headquarters.

How This Wave Fits the Year’s Broader Restructuring

Tuesday’s cuts are not an isolated event. Xbox has now conducted three distinct rounds of layoffs in 2026: an initial wave earlier in the year that removed 1,600 positions, the July “Resetting Xbox” memo that led to the September 4 WARN filing for 605 jobs, and now the September 22 reduction of 268 roles. Reporting citing Xbox’s internal update places the overall restructuring at approximately 75 percent complete, suggesting further reductions or organizational changes could still follow before the plan concludes.

The September 22 wave was also described in some reporting as occurring alongside broader Microsoft-wide reductions totaling fewer than 600 roles globally in that round, indicating Xbox’s cuts represented the bulk of that company-wide figure. For Singapore-based players and industry watchers following Microsoft’s console business, the restructuring comes even as Xbox’s current hardware lineup — the Xbox Series X and Series S, first released in November 2020 — remains unchanged and continues as the company’s active console generation.

What the Cuts Mean for Xbox’s Game Pipeline

The combination of layoffs at Halo Studios and the reported shift of Halo development oversight to Activision raises questions about production timelines for Microsoft’s most valuable franchise, though no release date changes have been announced as a result of the restructuring. Xbox’s broader first-party slate, including titles built on its Xbox Play Anywhere infrastructure, has not been publicly tied to delays stemming from the September cuts.

Players tracking Xbox’s ecosystem more broadly can find related context in Play Journal’s explainer on Xbox Play Anywhere and cross-play saves, which covers how Microsoft’s cross-platform infrastructure works independent of the studio changes reported this week.

Limitations of Current Reporting

Microsoft has not released a full public breakdown of which specific teams or projects within Halo Studios were affected, nor has it detailed severance terms for the 268 employees. The 75 percent completion figure for the restructuring comes from reporting citing an internal company update rather than a public Microsoft statement, and should be treated as the company’s own characterization rather than an independently verified benchmark.

What to Watch Next

• Whether Microsoft issues further WARN notices in Washington state as the restructuring approaches its reported completion point
• Any formal statement from Halo Studios or Xbox Game Studios leadership addressing the Activision oversight change
• Whether Activision’s expanded role over Halo, Rare, and World’s Edge affects announced or unannounced release timelines
• Additional details on the remaining roughly 25 percent of the 3,200-role restructuring plan

Play Journal will continue to follow developments in Microsoft’s Xbox restructuring as further details emerge.

Sources

• Xbox confirms Halo Studios layoffs and Undead Labs divestment — gamedeveloper.com
• Xbox Announces Four Major Studio Changes And Cuts … — purexbox.com
• Xbox lays off 268 more employees across Halo Studios and other first-party studios; company says: This brings us roughly three-quarters of… — timesofindia.indiatimes.com
• Call of Duty’s Activision to make next Halo game as Xbox cuts more jobs — bbc.co.uk
• Xbox Lays Off More Workers, Combines Studios – Aftermath.site — aftermath.site