Microsoft has officially confirmed what many feared: the Xbox layoffs in 2025 are the most sweeping in the brand's entire history. On July 6th, Xbox boss Asha Sharma sent an internal email — reviewed by IGN — announcing that 3,200 employees are set to lose their jobs across the current financial year, with 1,600 of those cuts happening immediately. Sharma's own words were blunt: Microsoft's gaming business is not healthy. That's a massive admission from the company that spent over $68 billion acquiring Activision Blizzard just two years ago.
This is your daily fix. Let's break down everything that happened on what might be the most consequential day in Xbox's recent history — and what it means for your favorite games, studios, and franchises.
00:45
Xbox boss Asha Sharma's internal email confirming 3,200 layoffs and the restructure details
Watch at 00:45 →
What Is the Xbox Restructure in 2025?
The scale of this restructure is hard to overstate. Microsoft's gaming division is effectively losing about one-fifth of its entire workforce. The layoffs span nearly every corner of the Xbox empire, including Activision, Bethesda, Blizzard, King, Mojang, and Xbox Game Studios proper. This comes just 12 months after Microsoft cut 9,000 jobs across the broader business in July 2024 — a round that saw studios shuttered and games canceled outright.
What makes the 2025 restructure different, at least on paper, is that Microsoft says it has found paths forward for the impacted studios rather than simply shutting them down. Whether that optimism holds up remains to be seen, but the intent appears to be preservation rather than elimination — at least for some teams.
Which Xbox Studios Are Being Sold?
Four studios are leaving Xbox as part of this restructure, and the details vary significantly by team:
02:10
Overview of the four studios leaving Xbox — Compulsion, Double Fine, Ninja Theory, and Undead Labs
Watch at 02:10 →
- Compulsion Games (South of Midnight) — Transitioning back to independence with its IP, catalog, and funding for its next unannounced game.
- Double Fine Productions (Psychonauts) — Also returning to independence. Microsoft retains the Psychonauts IP, but Double Fine gets runway for its next project. Tim Schafer's studio is going indie again.
- Ninja Theory (Hellblade / Senua's Saga) — Has entered terms to join new, unnamed ownership with funding to complete Senua's Saga: Hellblade III or its next chapter. The game is still coming — just not under Microsoft.
- Undead Labs (State of Decay) — Similarly entering new ownership, with funding to complete State of Decay 3. Both Senua and State of Decay 3 appear to still be on track under whoever picks these studios up.
Then there's Arkane Lyon, the French studio behind the upcoming Blade game. Due to French labor law, Arkane's management has entered a required consultation with its works council to review potential strategic options, which could include a sale or spin-out. The fate of the Blade game — which had been one of Xbox's more intriguing upcoming titles — is currently unknown.
Microsoft has not disclosed who is acquiring Ninja Theory or Undead Labs, which leaves a massive question mark hanging over both studios' futures. For now, fans are cautiously optimistic that Hellblade and State of Decay 3 will still release — just under different banners.
Are Fable, Elder Scrolls 6, and Gears Canceled?
Here's the one piece of genuinely good news buried in all of this: Microsoft insists none of its publicly announced first-party games are being canceled as part of these cuts. That means the following titles are confirmed safe:
- Fable
- Gears of War: E-Day
- Clockwork Revolution
- Call of Duty: Modern Warfare 4
- Minecraft Dungeons 2
- The Elder Scrolls 6
That's a meaningful reassurance for Xbox fans who watched last year's cuts kill games like Rare's Everwild and shut down studios like The Initiative, the developer behind Perfect Dark. This time around, the narrative is different — but it still stings knowing that the teams building these games have been significantly reduced in size.
04:30
The 132 blocked countries for Marvel Tokon on Steam, all matching regions without PSN access
Watch at 04:30 →
Why Is Marvel Tokon Blocked in 132 Countries?
Switching gears to the other major story of the day: Marvel Tokon Fighting Souls has been blocked in 132 countries on Steam, and the list reads like a global geography lesson — Afghanistan, Haiti, Serbia, Zimbabwe, Egypt, and dozens more are all locked out of the game ahead of its August 6th release on PC and PS5.
Arc System Works and PlayStation have not officially explained the reason for the regional blocks. However, fans have already connected the dots: every single country on the blocked list is a country where PlayStation Network is unavailable. That's not a coincidence — that's a policy.
Is Sony's PSN Policy Blocking Marvel Tokon on Steam?
This situation is giving a lot of players déjà vu, and for good reason. Back in 2024, developer Arrowhead Studios confirmed that Helldivers 2 would be blocked across a nearly identical list of territories because players would be required to link a PSN account — something impossible to do in countries where PSN doesn't exist. The backlash was enormous, and Sony eventually reversed course on that specific requirement.
06:15
Supergirl's second-weekend box office numbers and 74% domestic drop breakdown
Watch at 06:15 →
Now, Marvel Tokon appears to be heading down the same path. Sony's interactive entertainment division has had a rough few weeks in the court of public opinion:
- An internal document surfaced suggesting PlayStation is pulling back from releasing single-player games on PC.
- Sony announced it will end physical disc production for new games in early 2028.
- And now this — a fighting game co-published with PlayStation blocked for over 130 countries on Steam.
Arc System Works has yet to publicly comment, though IGN reports it has reached out for clarification. Players are hoping Sony reverses course here as it did with Helldivers 2, but the pattern of behavior isn't inspiring confidence. Marvel Tokon's PC and PS5 launch is set for August 6th.
Is Supergirl 2025 a Box Office Flop?
In movie news, Supergirl: Woman of Tomorrow has crossed the $100 million global box office threshold — but the way it got there tells a painful story. In its second weekend, the film brought in just $9.6 million domestically and $9.4 million internationally, representing a 74% drop from its opening weekend. That is a historically brutal decline, placing Supergirl in the company of some of the most notorious comic book misfires of all time: Morbius, The Marvels, The Flash, and Joker: Folie à Deux.
The math is brutal for Warner Brothers. Supergirl reportedly had a $170 million production budget and a $120 million marketing spend, meaning the studio needs roughly $300 million just to break even. The film's theatrical run had been projected to top out around $200 million — already a $100 million loss — but a 74% weekend drop suggests even that revised goal may be out of reach.
What Does Supergirl's Failure Mean for the DCU?
Supergirl was supposed to be a pivotal moment for James Gunn's rebooted DC Universe, arriving as the second major installment following Superman's strong launch. Instead, it's becoming a cautionary tale. The DCU's upcoming slate still includes Clayface (October), the TV series Lanterns (August premiere), and Superman: Man of Tomorrow scheduled for July 2027. Fans are hoping Superman's goodwill carries the universe forward while the Supergirl situation gets absorbed as a one-off stumble rather than a sign of things to come.
For now, it's a rough Monday in entertainment news — whether you're an Xbox fan watching studios change hands, a Marvel fighting game fan locked out of your region, or a DC fan watching Supergirl struggle at the multiplex. Stay tuned to IGN for all the latest updates as these stories continue to develop.
