Eurogamer and CVG sources, the layoffs affect a number of high-profile staff, while Eurogamer adds 150 people worked on the team's most recent release, Kinect Sports Rivals.
"At Xbox, our goal is to constantly create new fun, social and interactive entertainment experiences," a Microsoft spokesperson told Joystiq. "As part of Rare's commitment to this goal, we have made a decision to change our development process and methodology at Rare to best support our future projects, this has led to us reviewing the skills and the makeup of our development teams in our business."
According to CVG, the layoffs include studio Battletoads lead programmer Chris Sutherland and 15-year company veteran Gavin Price. According to Price's LinkedIn profile, he moved on from Rare this month and joined Priceless Pixels as an independent design consultant.
The news comes just a few days after an interview with Phil Spencer, in which the Xbox boss discussed how Rare's evaluating what it wants to do next. The UK studio's last game, Kinect Sports Rivals on Xbox One, failed to set critical pulses racing, while in Rare's home nation it entered the charts at 14th before disappearing from the top 40 five weeks later. Rare has been a major proponent of Microsoft's motion-sensing tech, making it one of the developers most affected by last week's announcement of a Kinect-less Xbox One.