Microsoft starts a new round of job cuts and the next phase of its Xbox 'reset.' Read the memo.

Microsoft has initiated a new round of layoffs affecting roughly 500 employees, primarily within its Xbox gaming division alongside select roles across cloud and AI units. This follows earlier workforce cuts in July, where the tech giant trimmed approximately 2.1% of its global headcount, or around 4,800 workers. The move is part of an ongoing multi-phase restructuring plan aimed at shedding about 20% of Xbox's workforce by the end of the fiscal year to streamline operations following years of aggressive acquisitions. According to an internal memo from Xbox executive Matt Booty, 268 gaming positions are being eliminated across first-party studios like Halo Studios and management layers. The restructuring involves major organizational shifts: Activision will take over development of the next Halo title with a dedicated team, Playground and Turn 10 are merging into a single entity, and Obsidian is moving under Bethesda. Furthermore, Microsoft is continuing studio divestitures, having spun off Compulsion, Double Fine, and Undead Labs, while initiating closure consultations for Ninja Theory. Financially, the streamlining indicates Microsoft's focus on cost discipline and operating efficiency within its gaming segment following the massive Activision Blizzard acquisition.