In July, Microsoft announced it would lay off 3,200 Xbox employees, 1,600 immediately and another 1,600 over the following year, and divest four studios. Microsoft cut about 2 percent of its total workforce in the action. Xbox cut 20 percent of its own.
Xbox is now adding a second burden for the people who remain. Chief people officer Jacinda Chislum Pearson recently told staff that starting February 1, 2027, employees in Puget Sound who live within 50 commuting miles of the Xbox headquarters must work from the office a minimum of four days a week, up from three.
“We have thousands of Xbox employees within commuting distance of Redmond. Taking advantage of that proximity and working together in person makes it easier to review work, resolve issues, and make decisions without the burden of scheduling another meeting.”
She also told managers to make the commute count. “Leaders should be present, and coming into the office should not mean spending the same day on Teams calls from a different building. Time well spent means reviewing work, solving problems, and playing games together, strengthening our path to becoming one Xbox.”
The memo arrives with more cuts on the calendar. Layoffs are reportedly set for this month, next month and early January.
The numbers behind the reset are weak. Microsoft reported a 7 percent drop in quarterly gaming revenue, driven by a 33 percent fall in Xbox hardware revenue and a 5 percent decline in content and services. Microsoft has put more than $20 billion into content and hardware over the past five years, not counting Activision Blizzard, and annual revenue still fell by nearly half a billion dollars. Xbox CEO Asha Sharma told employees that the division’s operating margins are three to 10 times lower than comparable businesses.
Sharma, an AI executive who took over Xbox in February, put it plainly: “We simply spread ourselves too thin.” In her memo to staff she wrote, “History is full of companies that mistake longevity for inevitability. We will not be one of them.”
The studios took the damage. Double Fine and Compulsion Games went independent, and Double Fine then laid off 23 people. Undead Labs went independent, became employee-owned and cut staff in late September. Ninja Theory is facing closure after two separate agreements to sell the studio fell through. The team was working on Senua, a Hellblade game announced at the 2026 Xbox Games Showcase and expected in 2027. Its horror project, Project Mara, was canceled in June.
One Ninja Theory gameplay programmer posted on LinkedIn: “It’s incredibly sad knowing that we won’t get to finish what we were working on. So much care, talent and effort went into it, and I really wish we’d had the chance to see what it could have become.”
The hardware side is not getting cheaper either. Reports say the next Xbox console, Project Helix, could cost between $1,200 and $1,800 without subsidies.
On Wednesday, Electronic Arts announced it was laying off around 400 employees, including the total closure of BioWare, the studio behind Mass Effect, Dragon Age, Knights of the Old Republic and Baldur’s Gate. The layoffs include the remaining team that had been working on the next Mass Effect, now canceled. BioWare is ending after more than 30 years.
The closure follows an earlier round of EA layoffs this year, after the release of Dragon Age: The Veilguard, and comes after a $55 billion leveraged buyout of EA. In an internal memo, EA said it will focus on shooters like Battlefield, sports games from EA Sports, and action-adventures including Star Wars Jedi and the upcoming Marvel’s Iron Man.
BioWare’s own statement read: “For more than 30 years, BioWare has been more than a studio. It has been a home for storytellers, developers, and the players who brought our worlds to life. Baldur’s Gate. Neverwinter Nights. Star Wars: Knights of the Old Republic. Dragon Age. Mass Effect. Anthem. Now, after more than three decades of shared adventures, BioWare is closing, and early development on the next Mass Effect project is ending.”
The studio’s recent record did not help. Mass Effect: Andromeda, Anthem and Dragon Age: The Veilguard were not large commercial successes.
Xbox and BioWare are two entries in a long ledger. The games industry layoff tracker kept by Amir Satvat projected in July that 14,259 game workers would lose their jobs in 2026, up 78 percent from its January forecast of 8,025. Confirmed layoffs had already reached 9,781 by July 26, more than the 9,197 for all of 2025. The tracker puts the five-year total from 2022 through 2026 at an estimated 58,087. Only 2024, at 15,631, was worse.
“The pace of layoffs is accelerating faster than our models initially predicted,” Satvat said.
Ubisoft is cutting too. On October 14 it told employees it plans to close RedLynx, the Helsinki studio behind the Trials series, affecting up to 52 positions, and cut 70 jobs at Ubisoft Singapore, about one-fifth of that studio. Rainbow Six Mobile will shut down on January 15, 2027. Earlier this year Ubisoft canceled six games and closed its Stockholm and Halifax studios. The Halifax closure followed a vote by employees to form a union. Reports in June said Winnipeg and Belgrade were closed as well.
The pattern runs across publishers. Microsoft is shrinking Xbox by a fifth and selling off studios. EA closed a studio that made some of the most-loved role-playing games of the last three decades. Ubisoft is closing a studio it bought in 2011. The money that remains is going to shooters, sports and licensed franchises.
Xbox is cutting a fifth of its staff, calling the survivors back to the office four days a week, and has more layoffs on the calendar. BioWare is gone. Ubisoft keeps closing studios. If the biggest publishers keep cutting the teams that make their games, who will be left to build what players actually want? Tell us in the comments.