Bungie put out a post this week called “The Next Chapter for Bungie,” and buried in the corporate-blog cheerfulness of that title is an admission I didn’t expect a studio to make this bluntly: Marathon, the extraction shooter Bungie spent years building as its post-Destiny future, “did not reach as many players as we had hoped.” So Bungie is reversing course. The vaulted Destiny 2 content- campaigns, destinations, and raids pulled since 2020’s Beyond Light to keep the game’s size and complexity manageable- is coming back. Marathon isn’t getting canceled, but it’s being “evolved” into something broader than the extraction format it launched as, which is studio-speak for the genre it bet on not holding up.

This lands three months after Bungie called its last major Destiny 2 update “final” and laid off close to 300 people, and it follows a roughly $765 million impairment charge Sony took against the studio. Reversing a “final” update and un-vaulting years of removed content isn’t a small correction. It’s Bungie admitting that walking away from the game that built the studio, in favor of a genre everyone else was also crowding into, cost more than it earned back.

Xbox, meanwhile, is reportedly about to cut “hundreds” more jobs this week and consolidate several studios, per The Information’s reporting as relayed through half a dozen outlets. This would be Microsoft’s second major reduction of 2026, after the 3,200-job restructure it announced in July, which already divested four studios and rewrote how the division operates. The specifics circulating now are murkier, and I want to flag that clearly: reports that Halo Studios could get folded into Activision Blizzard King, and that Arkane Lyon faces closure but is stuck in France’s mandatory Works Council consultation process until late in the year, are sourced to unconfirmed leaks and a podcast comment, not to Microsoft itself. Jason Schreier separately said on a podcast that Blizzard layoffs are “imminent,” which would be notable because Blizzard was spared entirely in July’s cuts despite its own 1,900-person union.

I keep coming back to how much this rhymes with what’s already happened elsewhere this year. Amazon walked away from Lost Ark and Throne and Liberty in August with barely an explanation, handing the games back rather than admitting the MMO publishing bet didn’t pay off. Gaming layoffs and DRAM price spikes turned out to be the same underlying story back in August too, studios cutting headcount while the hardware side of the industry eats a memory shortage it didn’t cause. And Xbox’s whole 2026 has been one long walk away from the console-exclusivity model that used to justify keeping so many studios on staff in the first place. If Xbox no longer needs a first-party lineup to sell a box, headcount in that lineup is exactly what you’d expect it to keep cutting.

What’s odd is that Bungie’s reversal points the opposite direction from Xbox’s trajectory. Xbox is shrinking and consolidating around fewer, bigger bets. Bungie just admitted the bigger, newer bet was the mistake and is crawling back toward the live-service game it already had, content vault and all. Both companies are responding to the same pressure: live-service games costing more to sustain than they return, but Xbox’s answer is to cut deeper into new projects while Bungie’s answer is to un-cancel the old one. I don’t think either company has actually figured out the right size for a modern live-service studio. They’re just failing toward different shapes.

The timing of the Blizzard layoffs is the detail I’d watch most closely over the next week. A union that survived the first cut getting hit in the second round would be a genuinely different story than routine restructuring, and Schreier’s “imminent” was vague enough that it could land any day now.

Sources