Xbox Studio Layoffs
Xbox Game Studios Head Craig Duncan Departs; Layoffs Expected Amid Microsoft Restructuring
Key Points
Craig Duncan replaced Alan Hartman when he took over the Xbox Game Studios leadership in November 2024, inheriting a wide portfolio that included Halo Studios, The Coalition, Playground Games, Obsidian, Ninja Theory, Rare, Double Fine, InXile, and Undead Labs. (This was only his ~20-month tenure.)
The internal shuffling leaves 14 first-party studios temporarily reporting to Matt Booty—giving him direct control over the full internal development pipeline until a permanent replacement is chosen.
Microsoft leadership described the broader restructuring as a “fundamental reset,” with reporting tying Duncan’s exit to the period around Microsoft’s fiscal year reset (expected to end June 30). The timing was characterized as “not coincidental” as layoffs were expected to begin after the June 30 close.
In his farewell message, Duncan publicly praised Louise O’Connor as “a thoughtful, creative, and trusted partner who has consistently championed the craft and supported our studios with clarity and care,” and she is described elsewhere as departing after joining in 1999 and later serving as Xbox Game Studios chief of staff following the “Everwild” cancellation.
Craig Duncan is out as head of Xbox Game Studios after just 20 months on the job, and his chief of staff Louise O'Connor is leaving with him. Windows Central reported that Matt Booty, Microsoft's president of game content and studios, will directly oversee all 14 first-party studios while the company searches for permanent replacements.
The exits land two weeks before Microsoft's fiscal year closes on June 30 — a date The Verge called "not coincidental," as layoffs are widely expected to begin right after. The shakeup is part of what Microsoft leadership has called a "fundamental reset" of its gaming division.
Duncan's Short Tenure Ends Before Layoffs Begin
Duncan took the Xbox Game Studios job in November 2024, succeeding the retiring Alan Hartman. He inherited a massive portfolio: Halo Studios, The Coalition, Playground Games, Obsidian, Ninja Theory, Rare, Double Fine, InXile, and Undead Labs, among others. In a farewell email to staff, he said his focus was on "supporting teams, strengthening studio culture, and delivering successful launches," according to Windows Central.
O'Connor joined Rare in 1999 as an animator and spent 27 years in the Microsoft ecosystem. She moved to the Xbox Game Studios chief of staff role after the troubled game *Everwild* was cancelled. Duncan praised her in his farewell note as "a thoughtful, creative, and trusted partner who has consistently championed the craft," per Bounding Into Comics.
Matt Booty Now Controls All 14 First-Party Studios
With Duncan gone, Booty gains direct authority over Microsoft's entire internal game development pipeline. That is 14 studios, all now reporting straight to him. Analysts at Niko Partners describe this as a "short-term consolidation tactic" — removing a layer of management to make it easier to apply corporate strategy, including cuts, to individual studios, according to the investigative briefing.
Eastern Herald reported that the move routes first-party studios directly up to Booty, cutting out the intermediate Xbox Game Studios leadership tier. Microsoft's official framing calls it a step toward "agility" — giving studio leaders a direct line to resources without a go-between. Critics call it something simpler: fewer people in the way of a top-down reset.
Fiscal Year Reset Shadows the Entire Restructuring
Microsoft's gaming division has already shed more than 2,500 jobs over the past two years, including the closure of Tango Gameworks and Arkane Austin in 2024. Now, with the June 30 fiscal year-end approaching, Bloomberg reported that another round of workforce cuts is expected. Studios with long development timelines and no near-term revenue — like Undead Labs and InXile — are seen as most at risk.
Techloy noted that the leadership shakeup fits the pattern of a company shifting from "growth at all costs" to "profitability per head." Phil Spencer, CEO of Microsoft Gaming, has pushed the "fundamental reset" framing publicly. The industry is now watching July 1 closely to see how deep the cuts go.
Developers Fear Loss of a Studio-First Culture
Inside Halo Studios and Ninja Theory, unnamed sources described the restructuring as "hollowing out the buffer" between developers and Microsoft's C-suite, according to reporting from Kotaku and Aftermath. Duncan and O'Connor were both known for putting studio culture first. Their departures signal a shift toward a more numbers-driven management style.
Some labor advocates and industry watchers go further. They argue that the Xbox Game Studios brand itself may eventually be folded into a single "Microsoft Gaming" content division — one that treats XGS, Bethesda, and Activision as one unified operation rather than separate creative entities. For now, Newsy Today reported, the search for a permanent replacement is underway with no timeline confirmed.
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