Xbox is cutting 268 jobs and handing development of the next Halo game to Activision, the studio behind Call of Duty. The announcement, made in a memo titled “Continuing Our Reset,” marks the second phase of a restructuring that began with layoffs back in July — and this round goes deeper structurally than it does in headcount.
Where the Cuts Are Landing
Xbox chief content officer Matt Booty confirmed the 268 roles span Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer. Booty says the actions completed since July, including recent studio divestitures, now bring Xbox roughly three-quarters of the way through the restructuring announced earlier this year. A smaller team will remain at Halo Studios specifically to support the community and games already in-market, rather than the studio shutting down outright.
Activision Takes the Wheel on Halo
The next mainline Halo title moves to a new, purpose-built team inside Activision — the studio Microsoft acquired for $69 billion in 2023 — kept deliberately separate from ongoing Call of Duty development. Activision is also expanding its remit to oversee two more studios: World’s Edge, maker of Age of Empires, and Rare, the studio behind Sea of Thieves and the classic GoldenEye 64. Booty framed the reorganization around “operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise” rather than simply cutting costs.
A Wider Studio Shuffle
Halo and Activision aren’t the only franchises changing hands. Obsidian Entertainment moves under Bethesda, continuing its current projects there. Microsoft Casual Games folds into King, the Candy Crush studio. Playground Games and Turn 10 — previously separate teams behind Forza Horizon and Forza Motorsport respectively — are merging into a single studio to focus on Forza and Fable going forward. Undead Labs has already completed its own transition and will still launch State of Decay 3 on Game Pass day one, now under a new publisher.
Two Studios Still in Limbo
Not every studio has a clear landing spot yet. Ninja Theory, developer of Hellblade, faces a proposed closure after Booty said two separate deals involving the studio fell through; Xbox says it will consult with employees about the possibility while continuing to weigh other options. Discussions around the French studio Arkane are ongoing and expected to continue through the end of 2026. Xbox has scheduled a company-wide town hall for October 6, where further updates on the restructuring are expected.
Bottom Line
Moving Halo to Activision is the headline here, but the more telling detail is Microsoft consolidating half a dozen studios into fewer, larger units across a single week — a structural bet that fewer, more tightly aligned teams will outperform the sprawling studio network Xbox built through years of acquisitions. For players, the practical impact likely shows up gradually: in how future Halo, Forza, and Fable games get made, not in anything changing on shelves tomorrow. With Ninja Theory’s fate still undecided and Arkane’s status unresolved until year’s end, this restructuring isn’t finished yet.
