Xbox will cut 268 positions across Halo Studios, undisclosed first-party studios and the XGS management and central functions layer, marking the second round of layoffs inside a sweeping restructuring that targets 3,200 total job losses.

The reductions, disclosed internally this week, fall five months after Microsoft's gaming division first laid out its workforce plan in July. Xbox chief content officer Matt Booty framed the new tranche in remarks to staff.

What's shifting across the portfolio?

• Rare and World's Edge report under Activision. Sea of Thieves developer Rare and Age of Empires custodian World's Edge now sit inside Activision's expanded publishing remit.
• Activision leads a new Halo game. A newly formed team under the publisher will develop the next Halo entry. Halo Studios retains "a small team" supporting shipped titles and the existing franchise.
• Obsidian joins Bethesda. The Fallout: New Vegas developer folds into the Bethesda organisation while continuing work on a new Fallout project.
• Playground and Turn 10 merge. The two studios combine to focus on the Fable and Forza franchises, consolidating racing and action-RPG workforces under one structure.
• Microsoft Casual Games reports to King. The Solitaire, Mahjong and Minesweeper operator moves under King's organisational umbrella.
• Undead Labs goes independent. The State of Decay 3 developer has secured an external publishing partner after exiting the Xbox first-party structure.

What's the status of Ninja Theory and Arkane?

Ninja Theory, the Cambridge studio behind Hellblade, faces a potential closure. Microsoft said two separate deals for the developer fell through before consultation with employees began; other options remain under consideration.

Senua, the studio's next project, was revealed during the Xbox Games Showcase in June — one month before the July layoff announcement. That sequence positions Ninja Theory as the first studio where a publicly unveiled title may not reach release inside Xbox.

Arkane's consultation continues and is expected to extend into next year. No outcome has been confirmed for the Dishonored and Prey developer.

How does Xbox justify the cuts?

Booty framed the moves as consolidation. "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring," he said.

He added: "The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise."

What remains unchanged — for now

Xbox had previously claimed none of its first-party publicly announced games or projects would be cancelled. The Ninja Theory and Arkane consultations now test that commitment against the cost of maintaining smaller or unprofitable teams.

How far through is the restructuring?

Booty's "roughly three-quarters" framing implies around 800 positions remain to be cut under the 3,200 figure, though Microsoft has not published a schedule. Compulsion Games and Double Fine, like Undead Labs, have already shifted to independent operation.

What to watch

The Ninja Theory consultation outcome — closure versus sale versus a scaled-back mandate — and the Arkane decision expected into next year are the two data points most likely to set the final shape of Microsoft's first-party development slate.