Microsoft begins massive Xbox layoffs: what’s next for Game Pass and its studios

Microsoft starts another wave of layoffs in the Xbox division, targeting global sales and dev teams. Here’s how it impacts Game Pass and future releases.

6/27/20251 min read

⚠️ Xbox hit by fourth major layoff wave: Microsoft restructures ahead of fiscal close

Microsoft has officially begun a new round of layoffs within its Xbox division, just days before closing its fiscal year. The move affects global sales and internal dev teams, part of a broader cost optimization strategy.

🔍 Context: what’s happening?

This is Microsoft’s fourth major cut in under two years:

  • 2023: Post-Activision acquisition

  • 2024: Bethesda & ZeniMax

  • 2025: Xbox Game Studios core structure

📉 Why now?

Microsoft’s fiscal year ends June 30. Ahead of its financial report, it’s:

  • Refocusing on cloud and AI

  • Cutting overlapping roles

  • Reducing long-term costs after heavy acquisitions

🎮 What it means for Xbox gamers

While no official cancellations are confirmed:

  • Studio delays are possible

  • Mid-tier projects may face risk

  • Game Pass release pace could slow down

📣 Community backlash

“This isn’t what we were promised when Xbox bought half the industry.”
“So much talent gone, for what?”

🧠 Xbox’s future: uncertainty ahead

Despite strong IPs, Xbox now faces:

  • Game Pass stagnation

  • Hardware fatigue

  • Strong competition from PS5 and Switch 2