The Activision Hangover: 2026 Xbox Layoffs Hit CoD Studios

Cuts hit the franchise's backbone

Call of Duty remains Xbox's biggest revenue driver, but the studios behind it have not been spared the industry's turmoil. A fresh round of Xbox layoffs in 2026 followed 2025's cuts, striking Activision and the network of studios that support Call of Duty. It is a sobering backdrop for a franchise that anchors the entire Xbox business.

The cuts are widely framed as part of an Xbox reset following the roughly $69 billion Activision Blizzard acquisition, as Microsoft reshapes its enormous gaming division.

The scale of the cuts

The layoffs have been substantial across two years:

• In July 2025, Microsoft cut around 9,000 jobs, roughly 4 percent of staff, with Call of Duty co-developers Raven, High Moon, and Sledgehammer among those affected.
• That round also brought cancellations elsewhere, including Everwild at Rare and Perfect Dark at The Initiative.
• In July 2026, a fresh round was reported at roughly 1,600 immediate layoffs plus more across the fiscal year, cited by some outlets as around 20 percent of Xbox's workforce.
• Double Fine and Compulsion were reported to be going independent, with Ninja Theory and Undead Labs being sold and Arkane under strategic review.

Exact totals vary by outlet, so the specific numbers are best treated as reported ranges rather than precise figures.

What it means for Call of Duty

The direct relevance to Call of Duty is that the franchise's supporting-studio network keeps absorbing cuts even as the series remains Xbox's biggest earner and a Game Pass anchor. That tension, a hugely profitable franchise whose contributing teams face repeated reductions, captures the strange economics of the post-acquisition era.

Black Ops 7 launched day one on Game Pass, described as Xbox's biggest Call of Duty Game Pass play to date, which underscores the strategic logic behind the acquisition: use the franchise to drive subscriptions. Yet the same period has seen the workforce building those games shrink.

For players, the near-term impact on Call of Duty itself may be limited, given the franchise's priority status, but the broader picture is one of a division under significant pressure to justify its enormous cost. The restructuring, studio sales, and strategic reviews suggest Microsoft is still working out how to run the largest publisher acquisition in gaming history. Call of Duty sits at the center of that reckoning, both as the crown jewel and as a franchise whose creators keep feeling the squeeze.