The ongoing Xbox layoffs are causing ripple effects that extend beyond the company’s 3,200 job cuts, according to a new report.
In his new video, Bloomberg investigative journalist Jason Schreier discussed that the consequences of the ongoing layoffs at Xbox extend far beyond Microsoft’s official total of 3,200 job cuts, creating ripple effects throughout the game industry.
According to Schreier, the layoffs are also affecting co-development partners that rely on contracts with Xbox studios. “The hidden cost of those job cuts and cancellations are the co-dev studios that are working with these studios,” he said. Modern AAA games are rarely built by a single developer. Instead, publishers frequently work with external teams that handle everything from user interface design and environments to substantial portions of a game’s development. When a major project is cancelled, those partner studios can lose significant revenue, forcing them to reduce staff of their own.
Schreier brought up Perfect Dark as a prime example. Following the game’s cancellation in 2025, not only was developer The Initiative shut down, but partner studio Crystal Dynamics also laid off employees. He added that other studios involved in the project, including Eidos-Montreal, were also affected, though they were unable to publicly acknowledge their involvement due to strict non-disclosure agreements (NDAs). These NDAs present another challenge to developers who lose their jobs after working on unannounced or cancelled games, as they often cannot include them in their portfolios or resumes.
The ripple effects don’t stop there. Schreier also highlighted Microsoft’s decision to reduce Xbox’s vendor spending by 50%. These vendors employ people working in public relations, marketing, production support, and other roles that operate alongside Xbox’s internal teams. Because they aren’t Microsoft employees, any resulting job losses won’t appear in the company’s official layoff headcount despite being tied to the restructuring.
Schreier recommended that companies should automatically release contractors and co-development partners from NDAs when projects are cancelled, allowing affected workers to publicly discuss their contributions and improve their chances of securing new jobs.
