Microsoft's Xbox division is reportedly preparing for what could be the largest single layoff event in gaming history, according to game designer George Broussard, co-founder of Apogee Software and co-creator of the Duke Nukem series. Broussard claims to have received a list of planned studio closures from an inside source at Xbox, though he has declined to share the details publicly.
Broussard's Warning
In a post on X, Broussard wrote: 'If it's even close to true (and it's from inside) this will likely be the largest single layoff event in gaming history.' He added, 'Xbox is going to be supremely unpopular for a very long time and the devastation is going to reverberate like the meteor that took out the dinosaurs.'
Studios at Risk
Reports indicate that at least four studios face potential closure: Undead Labs (State of Decay 3), Ninja Theory (Senua's Saga), Compulsion Games (South of Midnight), and Double Fine (Psychonauts 2). A GamesBeat report specifically highlights Undead Labs, acquired by Microsoft in 2018, as likely to be shut down unless a buyer is found. State of Decay 3 was recently showcased at the Xbox summer showcase with a 2027 release date, also confirmed for PlayStation 5.
Windows Central has corroborated that Undead Labs appears set to be offloaded. Meanwhile, Bloomberg's Jason Schreier noted on ResetEra that none of these studios are guaranteed to close; they may be spun out of Xbox to regain independence, potentially saving jobs. This mirrors Activision's subsidiary Toys for Bob, which went independent in 2024 but maintained ties with Microsoft to develop a new Spyro game.
Scope of Layoffs
The layoffs are expected to take place in early July, coinciding with the end of Xbox's fiscal year. Last year, Microsoft laid off approximately 9,100 employees company-wide, with an estimated 4,000 from Xbox. Combined with prior cuts, Xbox has laid off about 6,000 people in less than two years, and this number is expected to rise. Broussard warned that even studios not shut down will face layoffs.
Additional Context
Schreier also reported that Xbox has begun ending contracts with third-party vendors, though he clarified that cuts at Assembly, Xbox's main PR agency, are part of its own reorganisation and not directly tied to Xbox. The rumoured layoffs follow the sudden departure of two Xbox executives earlier this month and comments from Xbox heads Asha Sharma and Matt Booty about the need for a business 'reset.'
