Xbox is reportedly preparing for a second round of layoffs this week, according to The Information.
A source indicated that the company will “consolidate several of its game studios” as part of its ongoing restructuring.
According to VGC, this may involve mergers or internal changes within Xbox Game Studios, Bethesda, Activision, and Blizzard.
Xbox initially announced plans to lay off 3,200 employees in July. The first round resulted in 1,600 redundancies, including significant job losses at Obsidian, Bethesda, Id Software, and Zenimax Online Studios.
The platform holder divested five internal studios: Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs, and Arkane.
Compulsion Games and Double Fine became independent. Ninja Theory and Undead Labs are being acquired, while Arkane Lyon entered a consultation process.
Xbox CEO Asha Sharma said the restructuring came because the company was “simply [spreading itself] too thin.”
“In order to grow, we made a bunch of bets. As we did that, we inherently didn’t focus on the core business,” said Sharma. “The number one measure of your strategy is what you put your resources behind, and we simply spread ourselves too thin.”
In a memo to staff, Sharma noted that platform teams had grown by 40% since the start of the current hardware generation, while both player base and overall play time had declined.
Sharma outlined plans to limit management layers to five, addressing concerns about some teams having as many as 14 layers.
“As Xbox grew our headcount, we became more fragmented,” said Sharma. “Teams, studios, and functions often operate independently, and it became harder to work towards a shared goal, make the right tradeoffs, and get things done.”
Sharma concluded: “These changes are about a bigger future at Xbox, not a smaller one. I want Xbox to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect.
“I know we can achieve this goal. Xbox has been one of the most beloved franchises in entertainment history, with talented studios around the world, and we will return to growth in 2027.”
Earlier this month, Xbox announced it would publish Kojima Productions’ upcoming title Physint after the developer “unexpectedly received notice” from Sony that it would step away from the project in mid-June.
Sharma described the new partnership between Kojima Productions and Xbox as “a big moment” for the company.