Xbox Braces for Another Major Layoff Wave Following Top Executive Departure

Leadership Shakeup at Xbox

According to НВ — Техно: On June 15 at 10:00 PM, the head of Xbox's gaming division stepped down. Louise O'Connor, who became head of Xbox Game Studios operations last year, is also leaving her role. In response to these changes, development teams will temporarily report to Matt Booty, Xbox's content director. This restructuring affects the following studios:

• Halo
• The Coalition
• Playground Games
• Rare
• Obsidian
• Ninja Theory
• Double Fine

The leadership departures come after an internal memo from Matt Booty and Xbox CEO Sarah Bond to employees, confirming the need for a reset due to declining revenue, rising component costs, and intensifying competition. Executives acknowledged that Xbox overextended itself after acquiring a large number of studios over the past decade.

“We didn’t fund them properly to compete and win,” the letter stated.

This context helps explain why Xbox is now facing significant financial and strategic pressure.

According to Bloomberg, the company is preparing another wave of mass layoffs within its Xbox gaming division. These job cuts are expected to begin after Microsoft's fiscal year ends on June 30. For reference, Microsoft laid off 1,900 gaming staff earlier in 2024, and in early July 2025, announced an additional 9,000 job cuts across various departments.

Microsoft CEO's Remarks

Microsoft CEO Satya Nadella commented on the situation, stating:

“Our task now is to think about how to innovate in both hardware and games going forward, in an economically viable way.”

This signals the company's intent to find effective solutions to overcome current industry challenges.

The resignation of Xbox leaders and the prospect of widespread layoffs in the gaming division highlight a major strategic shift driven by financial struggles and competitive pressure. This could mark a move toward a more streamlined approach to studio management and resource allocation, which may in turn impact future projects and developments. It is crucial to monitor this situation, as it could significantly reshape the video game industry landscape and influence the strategies of other companies in the sector.

The current turmoil at Xbox is reminiscent of the recent challenges faced by other major gaming companies. For instance, Ubisoft has also announced studio closures and significant job cuts as it navigates similar financial pressures. This trend underscores the ongoing difficulties in the gaming industry, highlighting the need for companies to adapt to an increasingly competitive landscape.