Gaming's Bloody Summer Starts Tomorrow. Xbox Isn't the Only One Cutting.

July 1 marks the start of fiscal year resets across the industry. Multiple platform holders are expected to make cuts. Here's what we know right now.

Microsoft's fiscal year ends tonight. Starting tomorrow, the layoffs begin. And based on everything that's been reported over the last three weeks, what's coming for Xbox its just the beginning of what's shaping up to be the most brutal stretch of studio closures and job cuts the gaming industry has seen since the mass layoff wave of early 2024.

Here's where things stand heading into July.

Xbox: "Unrecognizable by the End of the Month"

Bloomberg's Jason Schreier reported that the cuts coming to Xbox will be "pretty brutal." His reporting identifies Compulsion Games (South of Midnight) and Double Fine (Kiln and Keeper) as studios on the chopping block. Ninja Theory, the studio behind Hellblade, has already been confirmed shut down. Employees across multiple Xbox studios have been posting "open to work" on LinkedIn after leadership gave them permission to start looking for new jobs before the formal cuts arrive.

The Blind layoff tracker has 2,500 confirmed Xbox cuts logged for the July wave. That follows the roughly 9,000 Microsoft wide cuts in July 2025 and the 1,900 gaming specific cuts in January 2024. This will be the fourth consecutive year of major Xbox layoffs.

Asha Sharma's "this cannot continue" memo from June 10 laid the groundwork for this. Revenue down nearly $500 million over five years. A 3% profit margin. Hardware costs up over 5x from two years ago. $20 billion spent on content, platform, and hardware subsidies not including the $68.7 billion Activision Blizzard acquisition. The numbers were never going to produce any outcome other than what's about to happen.

Schreier's words on what Xbox looks like by August: "unrecognizable."

It's Not Just Xbox

This is the part that turns a bad story into a worse one. French journalist Sylvain Trinel has warned that July 1 will bring closures and cuts beyond Microsoft. Sony and EA are both reportedly facing restructuring actions as the new fiscal calendar begins. BioWare's future is also uncertain.

Arkane Lyon is reportedly next in line after Arkane Austin was shut down in 2024. If that closure goes through both halves of the studio behind Dishonored and Deathloop will be gone within two years of each other.

Sony has already closed Bluepoint Games this year. Written off $765 million against Bungie's asset value across two installments. Cut over 400 people from Bungie in a single call. Every live service initiative outside of Helldivers has failed. Additional cuts are expected but the scope hasn't been confirmed.

EA has been conducting layoffs throughout 2026. Respawn took hits. Codemasters took hits. Battlefield Studios took hits. Long tenured employees, some with over a decade at the company, have been among those cut. And all of this is happening while EA moves toward closing its $55 billion acquisition by Saudi Arabia's Public Investment Fund, with the EU antitrust deadline set for July 22.

BioWare reportedly saw cuts after Dragon Age: The Veilguard underperformed. The studio that made Mass Effect and Knights of the Old Republic is in an uncertain position heading into the summer.

The Numbers That Should Stop Everyone

The 2026 State of the Game Industry Report from the Game Developers Conference surveyed over 2,300 industry professionals. The findings paint a picture that's hard to look away from.

One in three US game developers has been laid off in the past two years. At AAA studios specifically, two thirds of respondents reported that their employer had conducted layoffs within the last 12 months. Half of all respondents, regardless of studio size, said the same.

An estimated 45,000 gaming industry jobs were lost between 2022 and mid 2025. The peak hit in Q1 2024 at over 8,600 jobs in a single quarter. Private investment in gaming dropped 55% in 2025.

And the global gaming market generated $195.6 billion in content revenue that same year. The highest annual total in the history of the industry.

The industry is producing more money than it ever has while employing fewer of the people who make the games that generate it.

EA and Saudi Arabia

The $55 billion acquisition of EA by Saudi Arabia's Public Investment Fund is one of the largest deals in gaming history. The transaction has been moving toward completion throughout June with a closing target around June 30 and EU regulatory approval expected by July 22.

EA has been cutting staff ahead of the deal's closure. Reports indicate that employees across customer support and IT were affected along with recruitment teams spanning both US and India based positions. The exact number of roles cut remains unclear.

What the Saudi acquisition means for EA's studios, franchises, and workforce going forward is something the industry is watching closely. When ownership changes at this scale, the restructuring that follows tends to be significant. The layoffs happening now may be the beginning of a longer transformation under new ownership.

What Comes Next

The structural forces driving these cuts haven't changed. Development costs continue to rise. Consumer spending relative to pandemic era peaks has flattened. AI assisted workflows are being positioned to replace headcount at multiple publishers. Revenue is concentrating into a shrinking number of mega franchises while mid tier studios get squeezed out.

We've been covering the pieces of this story all month on EarlyMeta. The Xbox reset. The Bungie collapse. Sony ending PC ports to force console sales. The Steam Deck and Steam Machine pricing crisis. The pricing bubble across hardware and software. Each of those stories was a piece of the same picture. July is when that picture comes into full focus.

The fiscal year just ended. The cuts start tomorrow. And based on what's been reported, this summer is going to be one of the hardest stretches the gaming industry workforce has ever faced.

If you work in the industry and you're affected by what's coming, the people reading this site see you. The work you did mattered. And the decisions that led to these cuts were never yours to make.