As part of the consolidation, several Xbox studios will be consolidated under Call of Duty maker Activision.

Microsoft’s gaming division Xbox has announced plans to layoff 268 employees, as the organisation enters a period of consolidation. 

The company intends to bring several of its studios under the banner of Activision, the publisher behind games such as Call of Duty, Crash Bandicoot and Spyro the Dragon. Studios Rare and Age of Empires-maker World’s Edge will be overseen by Activision. 

Activision was purchased by Microsoft in 2023 for $69bn and will also lead the development of the next Halo game, according to Matt Booty, Xbox’s chief content officer. The layoffs are expected to impact employees at Halo Studios, which will continue to support the Halo community and games in-market.

Bethesda, which is responsible for popular game series Fallout and Elder Scrolls, will expand to include studio Obsidian Entertainment, which will continue to work on its current projects – which includes survival game Grounded and a new Fallout title.

Video game developer King, which makes Candy Crush, will now absorb Microsoft Casual Games, while Playground and Turn 10 will merge as one studio to focus on the Forza and Fable franchises. 

In a statement regarding the layoffs, Booty said: “We are eliminating 268 roles across Halo Studios, other first-party studios and the XGS management and central functions layer. The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring. 

“I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them. Second, we are reorganising our studios. 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.”

Booty added: “Our focus should be on supporting those affected and treating one another with care and respect. I will spend time with our studios over the next week. At our 6 October town hall, we will come together as an All-Xbox team to reflect on our progress and look ahead to one of the strongest game lineups in our history.”

In July, Microsoft announced that it was laying off 4,800 people, including 3,200 at Xbox, amid plans to cut costs and flatten its organisational structure in response to AI and a changing environment. 

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