Microsoft hands the next Halo game to Activision and cuts 268 Xbox jobs as part of a massive studio restructuring. Get the full details.
Microsoft and Xbox Gaming Chief Content Officer Matt Booty have officially announced a major structural reset, cutting 268 positions across Xbox Game Studios and shifting future development of the flagship Halo franchise directly to Activision. The move forms part of a broader corporate realignment affecting fewer than 600 total positions globally, including 300 roles in Washington state across Microsoft's tech and cloud divisions. The restructuring consolidates major development units under central publishing arms, transferring control of legendary IPs like Halo, Sea of Thieves, and Age of Empires while shifting studios like Obsidian Entertainment under Bethesda.
Why Is Activision Taking Over Development of the Next Halo Game?
In a major historical pivot for Xbox's flagship shooter franchise, responsibility for creating the next mainline Halo game has officially moved from Halo Studios (formerly 343 Industries) to Activision.
According to an internal memo sent to staff by Xbox Chief Content Officer Matt Booty, Activision is forming a brand new, purpose-built development team that will operate completely separate from the Call of Duty pipeline. A skeleton team at Halo Studios will remain intact strictly to oversee community operations and support current live-service titles in market.
In a official statement regarding the acquisition of the IP's development, Activision President Rob Kostich confirmed that work on the project has already begun:
- Dedicated Talent Pool: Activision is assembling a purpose-built unit specifically tailored for single-player and multiplayer arena design.
- Core Design Philosophy: The primary mission is to build "the greatest Halo game ever" while respecting the heritage of the franchise's combat loop.
- Separate Operations: Development will not draw resources or share cycles with annual Call of Duty releases.
How Many Jobs Were Cut in Microsoft's Latest Xbox Restructuring?
The latest round of reductions eliminates 268 positions specifically within Xbox Game Studios, hitting Halo Studios, central operational groups, and upper management teams. Broader cuts across Microsoft's overall operations account for fewer than 600 total layoffs worldwide, with roughly 300 concentrated in Washington state.
These reductions represent the continuation of an overarching cost-cutting measure announced in July, which aimed to cut approximately 3,200 roles across Xbox by the end of the fiscal year. With the latest round of lay-offs and recent studio divestitures completed, Xbox management confirmed that the division's organizational reset is now roughly 75% complete.
Which Xbox Studios Are Being Reorganized, Merged, or Closed?
To streamline operations and focus publishing resources, Microsoft is reassigning oversight of several veteran game development studios across its largest publishing divisions:
- Activision Oversight: Activision takes operational control of World's Edge (developers of Age of Empires) and Rare (creators of Sea of Thieves) alongside its new Halo team.
- Bethesda & Obsidian Integration: Obsidian Entertainment (creators of Fallout: New Vegas and Avowed) is moving directly under Bethesda, where it will continue active projects including Grounded and an unannounced Fallout project in collaboration with Bethesda Game Studios.
- Forza and Fable Studio Merge: Turn 10 Studios and Playground Games are officially merging into a unified super-studio handling the Forza racing franchise and the upcoming Fable reboot.
- Casual Games Shift to King: Mobile giant King (creators of Candy Crush) is absorbing Microsoft Casual Games to centralize casual title operations.
- Undead Labs Spin-Off: State of Decay 3 developer Undead Labs has spun off as an independent studio under a new publishing arrangement, though State of Decay 3 remains locked for a day-one launch on Xbox Game Pass.
- Ninja Theory and Arkane France Status: Following failed acquisition negotiations with prospective buyers, Ninja Theory (developers of Hellblade) is facing proposed closure as consultations begin. Meanwhile, negotiations surrounding the future of Arkane France remain ongoing.
What Does This Mean for Upcoming Xbox Game Pass Releases?
Despite the major organizational shifts, Xbox leadership reassured employees that its upcoming multiplatform and subscription lineup remains intact. Titles currently in production across Bethesda, Activision, and reorganized first-party studios will continue toward planned release dates.
Key upcoming titles like State of Decay 3, new entries in the Forza and Fable franchises, and Bethesda-partnered projects are planned to land on day one for Xbox Game Pass subscribers across Xbox platforms and PC.