Xbox loses studio lead ahead of impending layoffs, chief of staff also departs

Xbox has lost another leader among its ranks as the group prepares to "reset the business."

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Xbox Game Studios head Craig Duncan has left the organization as Microsoft reportedly prepares to make sweeping cuts to the division. Sources tell The Game Business that Duncan has stepped down from his position, and that Xbox Game Studios chief of staff Louise O'Connor is also leaving.

Duncan has been with Xbox for 15 years, originally serving as the boss of Rare, the UK game studio behind iconic hits like Donkey Kong Country, Banjo Kazooie and GoldenEye.

The news has yet to be confirmed by Microsoft, and Duncan's socials are quiet for now. It's possible that Duncan's departure will be recognized by the newly-transparent Xbox, and that a successor may be publicly named to allay fan worries.

Duncan's departure comes at a time of change at Xbox. The firm has essentially mis-spent the $92 billion earned from the Xbox Series generation over the last five years, investing $20 billion into the Xbox ecosystem without proper returns.

Bad calls, a weakened market position, underperforming games, subscriber losses, and the hardware crisis have all weighted these decisions even more. As a result of Xbox's current strategy, the group will report a 3% accountability/profit margin for Fiscal Year 2026.

For reference, Xbox had a 12% margin for the first 9 months of FY22, but the group's profits dropped to single-digit margins throughout calendar 2023.

Now Microsoft is course-correcting. Xbox is planning a "reset," and reports indicate that mass layoffs will be a big part of this strategy. Reducing operational units and/or projects will reduce costs as Microsoft now has to pay for these radical changes to its games business.