After the unexpected shuttering of 4 studios under Microsoft’s Xbox, a recent report suggests more layoffs and cuts are expected to be on the way.

In a report by Bloomberg, sources familiar with the company’s plans claim that Xbox is offering ‘voluntary severance agreements’ to producers, quality assurance testers, and employees at ZeniMax.

Others across the Xbox organization were also been informed that the cost-cutting initiative is not over and more cuts and layoffs are coming.

A town hall meeting was also held, with Xbox president Matt Booty speaking about the studio closures more broadly, noting that the company’s studios had been spread too thin, describing it like “peanut butter on bread” and leaders across the division felt understaffed.

In the meeting, Booty also talked about the disheartening closure of the 4 studios, where he praised the critically acclaimed Hi-Fi RUSH but did not reveal details on why Tango Gameworks, the developers behind the game, is shutting down.

Booty also talked about the shutdown of Arkane Austin and said that the commercial flop of the developer’s multiplayer vampire first-person shooter Redfall is not the reason for closing down the studio.

It was reported, before closure, that Tango Gameworks was in the process of pitching a sequel to Hi-Fi RUSH, while Arkane Austin pitched a new single-player “immersive sim” game, returning to its roots.

It was suggested that the main factor behind the closures of Tango Gameworks and Arkane Austin were both studios looking to expand as they pitched new projects.

Jill Braff, head of ZeniMax studios, was present at the town hall meeting and said that she hoped the reorganization would allow them to put more focus on fewer projects.

“It’s hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do,” Braff said, according to Bloomberg.

“I think we were about to topple over,” she added.

Yesterday, Microsoft announced its Xbox division is closing down 3 Bethesda studios, including the aforementioned Tango Gameworks and Arkane Austin, alongside Alpha Dog Games, as well as the absorption of Roundhouse Studios.

In January of this year, Microsoft confirmed that 1,900 staff would be laid off across its gaming divisions, including Activision Blizzard and Bethesda.

The layoffs come a few months following the completion of its $69 billion acquisition of Activision Blizzard, and Microsoft Gaming CEO Phil Spencer noted that the layoff decision was to “set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth”.