Microsoft laid off Chris Munson, the person who originally pitched and created Xbox FanFest, on July 6, 2026, as part of a massive corporate restructure. Munson was among 1,600 employees cut in an initial wave of layoffs ordered by Xbox CEO Asha Sharma, just three months after the company brought FanFest back to Los Angeles.
The Sudden Exit of the Xbox FanFest Creator
Chris Munson joined Microsoft in 2010, starting his tenure on the Halo marketing team. Over 15 1/2 years, he moved through roles involving State of Decay, new IP, and sports partnerships. He is most recognized as the architect of Xbox FanFest, an event launched in 2015 to connect consumers directly with executives like Phil Spencer and Major Nelson during E3 and Gamescom.
The timing of Munson’s departure is particularly sharp. In March 2026, Kotaku reported that CEO Asha Sharma explicitly prioritized the return of the live event to Los Angeles to honor long-term players. This revival culminated in a June showcase where attendees received free 25th anniversary translucent green Xbox Series X consoles.
“After 15 1/2 years, I was affected by the layoffs at Xbox today. End of an era,”
Chris Munson, via LinkedIn
Despite the cuts, the 2026 FanFest schedule remains active, with events planned globally throughout the summer and fall.
Asha Sharma’s Restructure: 3,200 Jobs at Risk
The loss of Munson is a small part of a much larger systemic shift. CEO Asha Sharma has initiated what she describes as the most significant restructure in Xbox history. The total number of planned layoffs is approximately 3,200 employees.
The rollout of these cuts is happening in stages. According to an internal memo seen by Kotaku, 1,600 of those positions were eliminated on July 6, with the remaining cuts to follow.
This volatility follows a period of aggressive expansion. Between 2020 and 2023, Microsoft finalized the acquisitions of Bethesda and Activision Blizzard. Now, the company is retreating from that footprint by spinning off studios and shedding staff.
Studio Spin-offs and the Loss of First-Party IP
Microsoft is no longer just cutting heads; it is cutting ties with entire development houses. Several studios are transitioning back to independence or moving to new owners entirely.
| Studio | New Status | Key IP / Project |
|---|---|---|
| Compulsion Games | Independent (Spin-off) | South of Midnight |
| Double Fine Productions | Independent (Spin-off) | Psychonauts 2 |
| Ninja Theory | New Ownership | Senua |
| Undead Labs | New Ownership | State of Decay 3 |
Both Compulsion Games and Double Fine will retain the rights to all their IP, including work created while under the Microsoft umbrella. To soften the blow, Microsoft is providing “runway funding” to these two studios to help them secure new investors and start new projects.
The situation is more precarious for others. Arkane Lyon, the studio developing the upcoming Blade game, has entered required consultation with its Works Council in France to explore “potential strategic options.”
The State of Remaining Xbox Game Studios
The current landscape for remaining studios is a mix of survival and diminished capacity. Many of the oldest pillars of the Xbox ecosystem have been gutted by previous rounds of cuts in 2023 and 2025.
- Turn 10 Studios: Reportedly gutted by 2025 layoffs, with a new Forza Motorsport project canceled. It now serves primarily as a support team for Playground Games.
- Rare: Focused on Sea of Thieves after 2025 layoffs and the cancellation of Everwild.
- Halo Studios: Formerly 343 Industries, the studio is currently finishing a remake of Halo: Combat Evolved, expected to launch in July.
- The Coalition: Preparing to ship the prequel Gears of War: E-Day exclusively on Xbox and PC in October.
While the corporate structure is fracturing, some high-profile projects appear insulated. Reports indicate that Hideo Kojima’s horror title, OD, will not be affected by these shifts.
Analysis: The End of the Acquisition Era
The transition from the “spending spree” of 2018 to the “restructure” of 2026 marks a fundamental pivot in Microsoft’s gaming strategy. The company spent billions to consolidate the industry, only to find that the overhead of managing dozens of studios—some of which are now being spun off with their IP intact—was unsustainable.
The layoff of Chris Munson is the most symbolic casualty of this era. By removing the very person who built the community-facing bridge between the corporate office and the fans, Microsoft is signaling a move away from the “tsunami of fun” and toward a leaner, more clinical operation.
For the studios involved, the “runway funding” provided to Double Fine and Compulsion is a rare corporate concession, but the overall trend is clear: Xbox is shrinking its first-party footprint to stabilize its bottom line. The next 30 days will likely reveal the “new ownership” of Ninja Theory and Undead Labs, providing a clearer picture of who is absorbing the remnants of Microsoft’s gaming empire.
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