Xbox is undergoing a major restructuring that includes thousands of layoffs and changes to key gaming franchises, as the company faces challenges in its gaming division. Between 2025 and 2027, Microsoft has announced the elimination of 3,200 positions, with 1,600 already confirmed in July 2026, and another 1,600 expected by June 2027. Several studios, including Undead Labs, Double Fine, Compulsion Games, and Ninja Theory, are either closing or being abandoned. Other studios, like Rare and Obsidian Entertainment, have been reassigned to different publishers such as Activision and Bethesda. Halo Studios, previously known as 343 Industries, has been hit hard, with most of its team laid off and the remaining staff now focused on supporting existing titles like Halo Infinite and Halo: Campaign Evolved. The Halo franchise has been transferred to Activision, marking a significant shift for the long-running series. Microsoft CEO Satya Nadella has described the restructuring as "wonderful to see," emphasizing the "rationalization" efforts led by Xbox CEO Asha Sharma. Nadella expressed confidence in the company's portfolio of licenses, including major franchises such as Halo, Call of Duty, Fallout, and World of Warcraft, and stated that Xbox aims to return to growth in the next fiscal year. However, this optimism contrasts sharply with the experiences of laid-off employees and the challenges faced by development teams. The restructuring has also affected other projects, with some planned initiatives at Halo Studios, including remakes of Halo 2 and Halo 3, reportedly put on hold. According to reports, Halo Studios boss Pierre Hintze has proposed using AI to develop smaller projects and outsourcing development for remakes, but Activision has reportedly shown reluctance toward this approach. Amid these changes, Xbox executive Matthew Ball highlighted the success of GTA 6 pre-orders on the platform, claiming they are "breaking records." However, the pre-orders are heavily skewed toward the PlayStation 5, with Sony's console having sold over 95 million units compared to the Xbox Series X/S's estimated 35 million. Despite this, Ball has defended the pre-order figures without providing specific data, drawing criticism for the lack of transparency. The restructuring and layoffs have raised questions about the future of Xbox, particularly regarding its next-generation console, Project Helix, and the company's ability to maintain its position in the gaming industry. The situation highlights the ongoing challenges faced by Microsoft's gaming division as it navigates a rapidly evolving market.