Xbox Game Studios chief reportedly steps down as layoffs loom

Craig Duncan took charge of Xbox Game Studios in October 2024.

Xbox Game Studios looks set to find its third leader in the space of two years amid reports that Microsoft's gaming division is preparing another major round of layoffs. The current Xbox Game Studios head Craig Duncan, who took up the post in October 2024 , is stepping down this week, according to a memo obtained by The Game Business .

Duncan's teams — which include Halo Studios, The Coalition, Playground Games, Rare, Obsidian, Ninja Theory and Double Fine — will report directly to Matt Booty, Xbox's chief content officer, until a replacement is appointed. Louise O'Connor, who became Xbox Game Studios chief of staff last year, is also said to be moving on.

Duncan and O'Connor are departing days after Booty and Xbox CEO Asha Sharma sent an ominous public memo to employees that discussed a "reset" of the business after a decline in revenue. The memo highlighted increased costs of hardware components and competition from other forms of entertainment for players' attention as other factors for concern. The executives also asserted that Xbox was "over extended" after snapping up so many studios over the last 10 years or so, claiming that "we have not adequately funded them to compete and win."

Booty and Sharma sent the memo just as Bloomberg reported Xbox is preparing for another round of mass layoffs. It's expected that the layoffs will begin after Microsoft's current fiscal year ends on June 30. Microsoft slashed around 1,900 jobs in its gaming division in early 2024 . In early July 2025, it said it was cutting 9,000 jobs across the company. Many of those were within Xbox, which canceled several games and closed a studio.

When asked at a conference last week about the memo Sharma and Booty shared, Microsoft CEO Satya Nadella said, "The challenge now for us is to think about how do you innovate both in hardware as well as in the games going forward, in an economically viable way." He added that, after 25 years of Microsoft investing in Xbox, "now we have to turn this into a sustainable business."