Following reports of State Of Decay 3 studio Undead Labs being shut down, it’s been claimed that the expected Xbox layoffs could be historically awful.
Microsoft has yet to publicly comment on the matter, but it’s widely believed that its Xbox division will see another round of layoffs, especially as Xbox heads Asha Sharma and Matt Booty have been talking about the business needing a ‘reset.’
After the sudden departure of two Xbox executives earlier this month, it was reported that at least three studios were facing closure, including Ninja Theory, despite its announcement of a new Senua game at Xbox’s summer showcase.
A fourth studio is reportedly on the chopping block as well, but it’s also claimed that the planned Xbox layoffs could be ‘the largest single layoff event in gaming history.’
This is according to game designer George Broussard, the co-founder of Apogee Software (known nowadays as 3D Realms) and co-creator of the Duke Nukem series.
On X, Broussard says he was given a list of the planned studio closures from an inside source at Xbox. He’s chosen not to share it but does say that even any studios that aren’t shut down will be subjected to layoffs too.
Expert, exclusive gaming analysis
Sign up to the GameCentral newsletter for a unique take on the week in gaming, alongside the latest reviews and more. Delivered to your inbox every Saturday morning.
‘If it’s even close to true (and it’s from inside) this will likely be the largest single layoff event in gaming history,’ Broussard writes, adding, ‘Xbox is going to be supremely unpopular for a very long time and the devastation is going to reverberate like the meteor that took out the dinosaurs.’
Brossuard’s claims coincide with a new report by GamesBeat, which lists State Of Decay series developer Undead Labs as among the studios that could be shut down if it doesn’t find a new buyer.
Undead Labs was acquired by Microsoft shortly after the release of State Of Decay 2 in 2018 and, since then, the studio has been working on State Of Decay 3.
After its 2020 reveal, though, the game has been MIA and only recently resurfaced at the Xbox summer showcase with a 2027 release date, where it was also confirmed to be coming to PlayStation 5 as well as Xbox Series X/S and PC.
Windows Central has also corroborated that Undead Labs looks set to be offloaded. As a reminder, the other three studios that will reportedly face closure are the aforementioned Ninja Theory, Compulsion Games (South Of Midnight), and Double Fine (Psychonauts 2).
On ResetEra, Bloomberg’s Jason Schreier has added that none of these studios are guaranteed to close if they fail to find a new buyer and that it’s entirely possible they’ll be spun out of Xbox and regain their independence, meaning they can at least save some jobs.
This is what Activision subsidiary Toys For Bob did back in 2024 though despite going independent again, it maintained close enough ties with Microsoft to helm a new Spyro game.
Schreier also recently reported that Xbox has begun ending contracts with third-party vendors, with Assembly, Xbox’s main PR agency, cutting jobs as well. However, Schreier later clarified that Assembly’s cuts are part of its own reorganisation and the agency’s contract with Xbox is unchanged.
The Xbox layoffs are expected to take place in early July once Xbox’s fiscal year wraps up, which is happening today.
This is exactly what happened last year, when Microsoft laid off around 9,100 employees across the company. It was estimated that about 4,000 of those were Xbox employees.
When combined with prior layoffs, this means Xbox laid off about 6,000 people in less than two years and that number is sadly only going to go up.
Email gamecentral@metro.co.uk, leave a comment below, follow us on Twitter.
To submit Inbox letters and Reader’s Features more easily, without the need to send an email, just use our Submit Stuff page here.
For more stories like this, check our Gaming page.