Microsoft is studying closing, selling or merging at least five studios within its Xbox division, a decision that would be accompanied by a wave of layoffs that would begin on July 6. The news, revealed by Tom Warren in The Verge, puts the entire industry on alert because we are talking about more than 1,000 jobs at risk, adding the general cuts to those that would be caused by the direct closure of studios.

Why Xbox is thinking about these cuts

The main reason behind all this movement is Marvel's Blade, the vampire game being developed by Arkane Studios. The project has been delayed until the end of 2027 and, to make matters worse, it has already exceeded its assigned budget. That combination of delay and cost overrun set off internal alarms at a time when Microsoft is seeking to reduce expenses throughout its gaming division.

But this is not something isolated or new. For weeks, Bloomberg had already reported that several studios were in active negotiations to try to spin off from Microsoft and thus avoid total closure. The end of June also coincides with the end of Microsoft's fiscal year, which according to industry sources explains why the layoffs would not be announced until after that date. Added to all this is a curious fact: Microsoft shares had their worst month on the stock market in June since 2000, right in the middle of the rumors of this “Xbox Reset.”

What studies could be affected?

The list of studies on the tightrope is already beginning to take shape and the truth is that it is surprising due to the number of well-known names that appear there. Arkane Studios, responsible for gems like Dishonored and Deathloop, is one of the main candidates, and Microsoft would even be exploring selling it instead of closing it directly.

Along with Arkane, four other studies appear that have been in the eye of the storm for weeks:

If the five operations end up being carried out, we are talking about a blow of at least 500 lost jobs even before the general wave of layoffs begins. And although Microsoft assures that Blade is not officially canceled, the final decision has not yet been completely made, which keeps hundreds of developers in brutal uncertainty.

What's coming for Xbox and its workers

Beyond specific studies, what is coming is a profound restructuring of Microsoft's entire gaming division, something that some media have already dubbed the "Xbox Reset." The company has been repeating the same pattern for months, first it was Arkane Austin and Tango Gameworks in 2024, and now everything indicates that history is repeating itself with another group of studios equally loved by the community.

The strongest thing of all is that the workers themselves have already begun to move. Several unions within Xbox are organizing to demand transparency and labor protections in the face of what they consider one of the largest waves of layoffs in the industry's recent history. Meanwhile, the date of July 6 is approaching and everyone in the gamer ecosystem is keeping an eye on what Microsoft finally decides.