Game Industry Weekly — July 8, 2026
Hey hey, game developers!
Before anything else: a change I want to announce directly to you. Starting today, Game Industry Weekly moves to Wednesdays, early afternoon. It was previously published every Saturday. The decision came from a straightforward process: I ran a survey on LinkedIn and also had direct conversations with some of you, and what came back was consistent. Wednesday afternoon reaches more people and fits better into the actual work week rhythm of those who read this. It makes sense: on Saturday, most people are offline, and content designed for developers and industry professionals lands better mid-week. So that's the new schedule. Any feedback from your end is welcome, here in the comments or directly in response to the newsletter.
When I decided to make this change, I thought it would be a challenge to find enough material for this first Wednesday edition, so close to last Saturday's issue. I was wrong. The news that broke Sunday made any hesitation irrelevant.
The Xbox Microsoft built was never going to work
On Sunday, Microsoft confirmed the largest restructure in Xbox history. 3,200 jobs cut in total: 1,600 immediately, another 1,600 over the next fiscal year. Four studios are leaving the Xbox Game Studios ecosystem: Compulsion Games and Double Fine are returning to independence, taking full ownership of South of Midnight and Psychonauts respectively. Ninja Theory and Undead Labs have been sold to new ownership with the financing needed to bring Senua's Saga: Hellblade II and State of Decay 3 to market. Arkane Lyon is in a consultation process with no defined outcome yet, and the signals aren't encouraging.
Beyond the studio exits, the internal numbers are serious. At id Software, maker of Doom: The Dark Ages, multiple sources report that roughly half the team has been laid off. One account puts that at over 90 people. The studio's QA department was particularly gutted. Obsidian has reportedly lost around 25% of its staff. And IO Interactive, as indirect collateral, announced the closure of its Istanbul studio: Xbox pulled financing for Project Fantasy, a project announced in 2023, and the Turkish studio didn't survive the decision.
This is the fifth major round of mass layoffs announced by Microsoft since the Activision Blizzard acquisition in 2023, for nearly $70 billion. Five rounds. In under three years.
Xbox CEO Asha Sharma's memo to employees, published on Xbox Wire, is unusually candid about the numbers. Xbox operating margins are three to ten times lower than comparable businesses. The company lost an average of 64 cents for every dollar invested in its studios. Platform teams grew 40% during this console generation while the player base and total playtime declined. In some parts of the organization, work passed through up to 14 layers of management.
Sharma also pointed to external context: a hardware component shortage, particularly memory, driven by massive investment in AI data centers. There's an irony she didn't name directly: Microsoft is one of the companies most aggressively investing in AI infrastructure, which contributes to the rising costs that make Xbox hardware more expensive to manufacture. The left hand making things harder for the right.
But external pressure explains part of this, not all of it. The Xbox strategy of the past several years was a broad bet: acquire studios, subsidize Game Pass, expand to multiple platforms. Each of those bets had its own logic. The problem is that none of them generated returns at the speed or scale needed. Sharma acknowledged this directly: Xbox expanded aggressively at the same time the industry's volume of competition grew in ways that made it impossible to compete across all fronts. "It is neither possible nor desirable to own every great independent studio," she wrote. True. But they were the ones who bought those studios. That wasn't an accident, it was a strategy that didn't work.
What concerns me about the shape of what comes next is what happens to the developers who remain. Bethesda has been restructured around its core franchises: Fallout, The Elder Scrolls, Wolfenstein, Doom, Quake. Anyone working on something outside those five was exposed. Concentrating resources on proven brands makes financial sense. In creative terms, it's a signal that the space for experimentation inside Microsoft's structure has contracted sharply.
I want to say this clearly: I have friends who built careers inside the Xbox ecosystem over years, people I worked alongside and know in this industry. To all of them affected by this process, you have my support and my solidarity. A mass layoff is never just a number. It's people, projects, work that will never exist, and a rupture that takes real time to recover from. I'm rooting for everyone navigating this right now.
Supercell opens grants for African studios
A different kind of news, but relevant to anyone thinking about how the global development ecosystem expands: Supercell has launched a developer grants program for game studios across Africa. The Finnish studio behind Clash of Clans and Brawl Stars is opening funding for studios in the region. The move fits a broader trend of publishers and developers seeking talent and creative perspectives outside the traditional North American, European, and Japanese markets. Worth watching as it develops.
If Wednesday timing works for your week, let me know in the comments. And if the Xbox situation, or anything else from today, connects to something you're navigating in your own work, the comments section and my inbox are open. Pass this along to anyone you think should be following along.
Take care and see you next Wednesday!
