Xbox Game Studios is undergoing a leadership shakeup as the gaming unit faces another anticipated wave of layoffs. According to a memo obtained by The Game Business, current head Craig Duncan — who took the position in October 2024 — is stepping down this week. Duncan's departure marks the third change at the helm of the studio group in two years.
Executive Departures
Duncan oversaw a portfolio of high-profile studios, including Halo Studios, The Coalition, Playground Games, Rare, Obsidian, Ninja Theory, and Double Fine. Until a replacement is appointed, these teams will report directly to Matt Booty, Xbox's chief content officer. Additionally, Louise O'Connor, who became Xbox Game Studios chief of staff last year, is also said to be moving on. Both departures occur days after a significant internal memo from Booty and Xbox CEO Asha Sharma.
Memo Details and Business Challenges
In the memo, Booty and Sharma discussed a "reset" of the business following a decline in revenue. They pointed to increased costs of hardware components and heightened competition from other forms of entertainment as key concerns. The executives asserted that Xbox was "over extended" after acquiring numerous studios over the past decade, stating that "we have not adequately funded them to compete and win." The memo was sent just as Bloomberg reported that Xbox is preparing for another round of mass layoffs, expected to begin after Microsoft's fiscal year ends on June 30.
Layoff History
This would not be the first significant workforce reduction. In early 2024, Microsoft slashed around 1,900 jobs in its gaming division. Then, in early July 2025, it announced 9,000 job cuts across the company, many within Xbox, leading to the cancellation of several games and the closure of a studio. The following table summarizes recent layoffs:
| Period | Job Cuts | Division Scope |
|---|---|---|
| Early 2024 | ~1,900 | Gaming division |
| Early July 2025 | 9,000 (company-wide) | Many in Xbox, with game cancellations and studio closure |
CEO Perspective
When asked about the memo at a conference last week, Microsoft CEO Satya Nadella said, "The challenge now for us is to think about how do you innovate both in hardware as well as in the games going forward, in an economically viable way." He added that after 25 years of Microsoft investing in Xbox, "now we have to turn this into a sustainable business." The leadership changes and pending layoffs underscore the pressure on Xbox to realign its strategy amid shifting market conditions.
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