At least five employees were fired on Wednesday in part of Microsoft’s entire company-wide layoffs, according to a developer with knowledge of the situation. An estimated 200 to 300 people remained in the studio.
Employees in Microsoft’s Xbox division received an email Wednesday morning from Microsoft Games CEO Phil Spencer that attacked the team in the coming days. The fired Halo Studios employee received an additional invitation to a meeting with the organization’s leaders and two hours later the team’s call began. In a discussion on severance payments, the reason for shooting consistent with Spencer’s memorandum – “Improving Agility and Effectiveness.”
“I’m personally angry at the email Phil gave us, because it’s the most lucrative year for Xbox to enjoy Xbox in the layoffs,” the developer told Engadget. “I’m not sure which part I should be proud of.”
Halo Studios is currently working on multiple games, including the next Mainline Halo installment, which is Halo: Infiniteit is quietly rotating its content rhythm. According to the developer, the studio is in a tense mood, especially on a project that has been in crisis recently.
“I don’t think no one is very happy with the quality of the product right now,” they said. “There are a lot of tension and inspiring conversations trying to gather people to ship.” The studio teased recently that it will reveal what it did at this year’s Halo World Championships in October.
Halo Studios was shocked by layoffs in 2023, when it was still known as the 343 industry, which mainly affected the campaign and narrative teams, including Halo veteran Joe Staten. (This is also the reason Halo: Infinite Since then, there has been no lasting storyline). Today, Halo Studios employs a convergence of full-time employees and contractors, with primary producers and quality assurance roles usually signed.
343 industry has been criticized by fans for launch status Halo: InfiniteOver the years, several former employees have expressed their reliance on the studio to contractors, who typically work with the company for up to 18 months.
The staff I spoke to said that since 2023, in the US and Europe, a general shift in working with contract studios (rather than individual contractors) to speed up halo production. This reflects the way other major FPS franchises, such as Call of Duty and Battlefield.
“Xbox generally feels the curve of game development for several years, which leads to a lot of wasted time and effort,” the employee said. Meanwhile, multiple outgoing team members talked enthusiastically about the time they spent at Halo Studios and the people they worked with.
The layoffs at Microsoft on July 2 affected 9,000 employees worldwide, including 830 in Washington, where Halo Studios is located. The Xbox department suffered major shootings, cancellation of games and studio closures. A Microsoft spokesman said the Xbox team did not absorb most of the layoffs, but given its relatively small layoffs in the organization, the framework may not accurately reflect the impact.
Under Xbox Banners, Rare Everwild and initiatives Perfect darkness The restart was cancelled and the plan was completely shut down. Forza Motorsport developer Turn 10 Studios reportedly lost its “bigest majority” of its staff, while the rare Zenimax Online Studios, King, Raven, Sledgehammer Games and Halo Studios were all affected. Zenimax president Matt Firor went out after 18 years of leading the studio, and experienced rare designer Gregg Mayles reportedly disappeared after decades with his team. Most importantly, the blizzard is setting The rumble of the monster.
Microsoft is increasingly focused on AI, and this shift has pushed its stock price to new highs. On the Llamacon in Meta in April, CEO Satya Nadella said up to 30% of the company’s code was written by AI. February event acknowledges the use of AI Black Ops 6. It is unclear how much AI has to do with the latest round of layoffs, but using Copilot in Microsoft is no longer “optional”.
The developer I spoke to said, “They are trying the most to replace AI agents with as much work as possible.”
News about specific Xbox teams popped up throughout the day as employees shared their experiences on social media and talked to various publications. Microsoft laid off 1,900 Xbox employees in January 2024 and added another 650 in September, when it closed Arkane Austin, Alpha Dog Games and Tango Gameworks (the latter was a Krafton acquisition). Microsoft reported net revenue from $25.8 billion in the first three months of 2025, with an 8% increase in annual revenue from Xbox content and services.
Microsoft told Engadget that layoffs would affect less than 4% of the company’s global workforce. A statement from a Microsoft spokesperson is as follows: “We continue to implement organizational and workforce changes, which are necessary to bring companies and teams to success in a dynamic market.”
If you purchase something through the links in this article, we may earn commissions.
