The Xbox layoffs we reported on last week are now expected to begin Monday, July 6th, just days after Microsoft closed the books on its fiscal year. And the picture of what's on the chopping block has gotten a LOT more specific.
As Engadget reports, a leaked list corroborated by Bloomberg and The Verge names five studios facing closure or sale: Compulsion Games, Double Fine, Ninja Theory, Undead Labs, and Arkane, with roughly 435 jobs at risk across them. Microsoft hasn't confirmed ANY of this, and some of these studios are reportedly in active negotiations to avoid the worst. But the sourcing has been stacking up all week.
The single most painful headline in the pile might be Marvel's Blade. The Verge's Tom Warren reports the vampire-hunter game has slipped to late 2027, is over budget, and is now facing outright cancellation, while Microsoft weighs selling developer Arkane Lyon rather than shuttering it, according to GamesRadar's roundup. That matches up with what we reported on June 30th, when Arkane and Blade first surfaced as being at-risk.
There's at least one company fighting back. Double Fine leadership, including founder Tim Schafer, is reportedly exploring a management-led buyout to take the Psychonauts studio independent rather than shutting its doors. Twenty-six years after Schafer founded it, the studio may end up buying its own freedom.
The employees aren't waiting in silence either. Unionized Xbox staff under the CWA held a press conference declaring they "will not be treated as disposable," Kotaku reports, and laid out their demands before the cuts land:
- Advance warning of layoffs instead of day-of notifications
- Hiring freezes on open roles so affected workers can transfer internally
- Two-year recall rights for laid-off employees
The union says Microsoft has sat on its layoff-protection proposals for MONTHS. Notably, this is the same summer MTG Arena developers at Wizards of the Coast voted 83% to form that company's first-ever union. Labor organizing has gone from a fringe story to the industry's default answer for weeks like this.
As for the scale, GeekWire reports that this round includes Xbox, sales, and consulting and could reach roughly 5,000 roles, roughly 2.5% of Microsoft's workforce. One industry veteran has claimed the gaming side alone would be "the largest single layoff event in gaming history."
That figure hasn't been confirmed, but the direction isn't in doubt. CEO Asha Sharma's "Reset" memo already shared the economics of the division, which according to Bloomberg, has seen a $500 million decline in revenue over the last five years. It simply can't continue.
Microsoft spent $7.5 billion on ZeniMax in 2021 and a record $68.7 billion on Activision Blizzard in 2023. The studios now on the leaked list were the faces of that buying spree: Compulsion shipped South of Midnight just last year, Ninja Theory built its name on the Hellblade games, Double Fine's Psychonauts 2 was one of the best-reviewed Xbox exclusives of its generation, and Undead Labs is right in the middle of development on State of Decay 3.
This also caps the most brutal six weeks for gaming industry jobs in recent memory: EA cut staff as its $55 billion buyout closed in, Sony gutted Bungie as Destiny 2 wound down, and now this.
Three things to watch for tomorrow: whether Microsoft confirms a number, whether "sale" or "spin-off" turns out to mean survival for the named studios, and which games vanish along with the teams making them.
Which of these five studios would hurt the most to lose? Will more of them go down fighting? Let me know what you think in the comments below!
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