Xbox plans to cut 1,600 employees and has stated which studios it intends to part ways with. Eight years later, almost nothing remains of the biggest E3 press conference.
Xbox has announced plans to lay off employees. Now there are clear statements: Xbox aims to reduce 20% of its workforce and plans to sell or spin off five studios. The studios will be spun off, continuing either independently or are said to have already found a buyer.
From the major Xbox E3 press conference, which according to Xbox was “the biggest in Microsoft’s history,” only a single studio remains in the end. Specifically, Asha Sharma says on X.com:
We are now not only competing with the biggest publishers but also with smaller independent studios. It is neither feasible nor desirable to own every great indie studio.
1,600 Fewer Employees, 5 Studios Leaving Xbox
Which studios were acquired by Xbox in 2018? At E3 2018, then Xbox head Phil Spencer announced that big plans were in the works and stated that five studios had been purchased. According to Xbox.com, it specifically involved the following five studios.
- The Initiative
- Undead Labs
- Ninja Theory
- Compulsion Games
- Playground Games
What happens now? Xbox has announced that it will part ways with a total of five studios. Three of them were acquired in 2018, the fourth studio, The Initiative, was dissolved in 2025 and no longer exists today. In the end, only Playground Games remains at Xbox, which is now responsible for the racing game Forza Horizon 6.
In addition to the studios acquired in 2018, Xbox will part ways with Arkane. The studio was acquired by Zenimax in August 2010 and then came to Microsoft.
However, the studios will not be closed but will either continue their work as independent companies or have found a buyer. The Xbox head writes on X.com:
Compulsion Games and Double Fine Productions will transition back to self-management and develop into independent studios with their intellectual property, catalog, and the funding needed for their next games.
Ninja Theory and Undead Labs have made agreements to complete and further advance the development of ‘Senua’ and ‘State of Decay 3’ under new ownership with the necessary funding.
In France, Arkane’s management is currently initiating the necessary consultations with the works council to explore potential strategic options.
Arkane is said to be internally reviewing strategic options. What this exactly means or if a buyer is already in the wings is not known.
At the Xbox Showcase on June 7, 2026, strong titles were announced. Just three days later, we learn how poorly the Microsoft console is really doing, and mass layoffs are looming. Read more about it directly on MeinMMO: 100 days had fans loving the new head of Xbox, now she is hitting the reset button: “This can’t continue”
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