Xbox is almost certainly planning to lay off a significant number of employees next month. Reports that layoffs are coming led some to fear for their favorite smaller Xbox-owned studios, and early follow-ups to the layoff reports suggest that Xbox users worried about those studios are right to be afraid.
Imminent layoffs by Xbox may result in studio closures
While Xbox boss Asha Sharma hasn't directly confirmed that she and her team will put potentially thousands of people out of work in July, she did admit that things have to change. Bloomberg reported that widespread layoffs are coming to Xbox, and Sharma shared a memo that was distributed internally, seemingly in response to Bloomberg's claims.
In it, Sharma admits that Xbox will end this fiscal year with just a three percent margin of responsibility, and that after spending $20 billion over the past five years, Xbox's annual revenue is down $500 million. Again, no word on layoffs, but additional reporting from The Verge claims the cuts could involve a studio closure or changes to the Xbox studio lineup.
People are worried about double fines
The additional information has Xbox users fearing the worst about where Xbox might swing its studio-shutting ax. The top of the heap is Double Fine. While the legendary studio always has the next Psychonauts to point to if Xbox asks what it's cooking, Double Fine's last two games have really been personal projects that don't seem to have made much of a profit for its publishing overlords.
Double Fine released Keeper in late 2025. Sales data is not available for the title, but it seems unlikely that it secretly sold in the millions. This year, Double Fine released Kiln, which, although again there is no sales data, we know that the game did not perform as well as Xbox would have liked due to its player numbers on Steam.
The other studio that future Xbox owners fear is Rare. Again, like Double Fine, Rare has a big game to point to when Xbox asks what it's up to thanks to Sea of Thieves. A successful live service game, which really helps. But with Everwild being canceled, it's unclear exactly what Rare is working on for Xbox right now in terms of new games.
Some have suggested that smaller studios under the Xbox banner need to talk to Toys for Bob and ask how the studio, which just announced its new Spyro game, managed to escape its Xbox-owned clutches. It's a costly endeavor for any studio that wants to do it, because it means buying back your independence, and it's almost certainly too late for whatever studios will be closing next month, if any.
- Stamp
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Microsoft
- Original release date
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November 10, 2020
- Original MSRP (USD)
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$499 USD
- Operating system
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Proprietary (Windows based)
- Processor
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Custom AMD 8-core Zen 2 3.8 GHz
- Resolution
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720p – 4K UHD
