As layoff reports swirl, Xbox sees two key leadership exits

Two senior Xbox leaders are set to leave Microsoft this week, adding to uncertainty surrounding the gaming business as reports of potential layoffs and organisational changes continue to circulate.

According to reporting by The Game Business, Craig Duncan, head of Xbox Game Studios, will depart after roughly 18 months in the role. Louise O'Connor, chief of staff at Xbox Game Studios, is also leaving the company.

The exits come at a time when Xbox is navigating declining revenue, strategic shifts around its gaming portfolio and reports of potential job cuts across the division.

Leadership departures hit Xbox Game Studios

Duncan has led Xbox Game Studios since November 2024, overseeing Microsoft's first-party development teams, including Halo Studios, The Coalition and Ninja Theory.

His association with Xbox stretches back more than a decade. Duncan joined Rare in 2011 as a senior studio director and later led the developer through major projects including Sea of Thieves.

In an email to staff reported by The Game Business, Duncan reflected on his tenure leading Xbox Game Studios.

"When I stepped into the role of leading Xbox Game Studios 20 months ago, my purpose was to serve our studios, our teams, and the people making our games," Duncan wrote.

He added that the organisation had delivered multiple successful game launches during his leadership.

Rare veteran Louise O'Connor also exits

O'Connor's departure marks a second senior leadership change within Xbox Game Studios.

She was promoted to chief of staff in August 2025 following the cancellation of Rare's long-running project Everwild.

In comments shared with staff, Duncan described O'Connor as a trusted partner who had supported Xbox Game Studios and its development teams.

The departures remove two experienced leaders with deep ties to Rare and Xbox's first-party game development operations.

Changes arrive amid broader uncertainty

The exits come against a backdrop of growing speculation about Xbox's future structure and workforce plans.

Recent reports have suggested:

• Potential layoffs across Xbox later this month.
• Workforce reductions that could affect thousands of employees.
• The possibility of at least one studio being impacted.
• Ongoing strategic reviews within Microsoft's gaming business.
• Discussions about Xbox's future operating structure within Microsoft.

While no direct connection between the executive departures and reported workforce reductions has been confirmed, the timing has intensified scrutiny of the division's direction.

The original Metro report noted that the reasons behind the resignations remain unclear.

Reporting lines shift as succession process begins

Following Duncan's departure, Xbox's first-party studios will report to Matt Booty, Microsoft's chief content officer for gaming, until a permanent successor is appointed, according to The Game Business.

The leadership transition comes as Xbox continues to adapt its business strategy amid changing market conditions and evolving priorities across the gaming industry.

For Microsoft, the immediate challenge will be maintaining stability across its game development organisation while managing leadership transitions and addressing questions surrounding the future shape of the Xbox business.

The coming weeks are likely to provide greater clarity on both the leadership structure and workforce plans for one of the world's largest gaming organisations.