Xbox is almost certainly planning to lay off a significant number of employees next month. Reports that cuts are coming have some fearing for their favorite small Xbox-owned studios, and early follow-ups on layoff reports suggest that Xbox users worried about those studios are right to fear.
The impending Xbox layoffs could result in the studio closing
While Xbox CEO Asha Sharma wouldn't confirm that potentially thousands of people will be out of a job this July, she admitted that things need to change. Bloomberg reported that widespread layoffs were coming to Xbox, and Sharma shared a memo that was distributed internally, apparently in response to Bloomberg's claims.
In it, Sharma acknowledged that Xbox will end this fiscal year with an accountability margin of just three percent, and that Xbox's annual revenue is down by $500 million after spending $20 billion over the past five years. Again, there's no mention of layoffs, but The Verge claims that further reporting could include studio closures or changes to the Xbox Studio lineup.
People are worried about double penalties
That extra information has Xbox users fearing the worst about where Xbox might swing the ax to close its studio. The top of the pile is double fine. Although the legendary studio always has another psychonaut if the Xbox asks what it is cooking, the last two games of Double Fine are really individual projects that do not seem to have generated much revenue for its publication.
Double Fine released the keeper at the end of 2025. Sales data for the title isn't available, but it's unlikely to have secretly sold in the millions. This year, Double Fine released a slot, which, again, there is no sales data, we know that the game did not perform well and Xbox was favored due to its player numbers on Steam.
Another studio whose future Xbox owners fear is Rare. Again, like Double Fine, Rare has a great game to point out what Sea of Thieves has when Xbox asks. A successful live service game, that certainly helps. However, since Everwild has been canceled, it's unclear what exactly Rare is working on in terms of new games for Xbox right now.
Some have suggested smaller studios under the Xbox banner talk to Toys for Bob and ask how the studio announcing its new Spyro game managed to escape the clutches of Xbox-ownership. It's an expensive endeavor for any studio that wants to do this, because it means taking back your freedom, and if any studios are closing next month, it's almost certainly too late.
- brand
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Microsoft
- Original release date
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November 10, 2020
- Original MSRP (USD)
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$499
- operating system
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Proprietary (Windows based)
- processor
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Custom AMD 8-core Zen 2 3.8 GHz
- resolve
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720p – 4K UHD
