Xbox Cuts 268 More Jobs, Moves Halo to Activision in Sweeping Studio Reset

Xbox's yearlong "reset" claimed another 268 jobs on September 22, and this round came with the biggest change yet to how the platform makes its flagship franchise. In a memo titled "Continuing Our Reset," Xbox chief content officer Matt Booty told staff the cuts hit Halo Studios, other first-party teams, and the Xbox Game Studios management and central-functions layer, while confirming that development of the next Halo game is moving to a newly formed team inside Activision.

The Cuts, By the Numbers

Booty's memo puts the new total at 268 eliminated roles, which Xbox says represents roughly three-quarters of the reductions it first outlined in July, when the platform's broader restructuring began alongside a wave of studio divestitures. The September cuts land squarely inside Halo Studios and the XGS management layer rather than being spread evenly across Xbox's whole first-party lineup, making this the most concentrated hit to the Halo team since its 2024 rebrand from 343 Industries.

Halo Moves to Activision

The headline change is where Halo goes next. Activision, the Call of Duty publisher Microsoft folded into Xbox Game Studios in 2023, will build the next mainline Halo title with what Booty's memo calls "a new, purpose-built team" kept separate from Call of Duty's own development. A smaller group will stay at Halo Studios to keep servicing the community and the games already in market, including this year's Halo: Campaign Evolved remake, but Activision now effectively owns the franchise's future.

Activision's remit is also expanding sideways: the memo hands it oversight of World's Edge, the Age of Empires studio, and Rare, the Sea of Thieves and Banjo-Kazooie developer, folding both into Activision's management structure rather than leaving them under the old XGS umbrella.

Bethesda, King and a Forza-Fable Merger

Halo isn't the only franchise getting reorganized. Bethesda absorbs Obsidian Entertainment outright, with Obsidian continuing its current slate, including Grounded and an unannounced Fallout project, now reporting up through Bethesda leadership. King, Microsoft's mobile studio behind Candy Crush, similarly absorbs Microsoft Casual Games. And in the most consequential merger for console players, Playground Games and Turn 10 Studios are combining into a single studio built around the Forza and Fable franchises, ending their run as separate teams under one roof.

The Studios Being Cut Loose

Not every studio in the memo is being folded inward. Compulsion Games and Double Fine Productions are being spun back out as independently managed studios, retaining their own IP and continued funding rather than staying inside Xbox Game Studios' direct structure. Undead Labs, divested earlier this year, gets a direct callout as a success case: State of Decay 3 is still on track to launch day one on Xbox Game Pass under its new ownership.

Two studios face a harder outcome. Ninja Theory, maker of the Hellblade series, is now in a formal closure consultation after Booty's memo says two separate agreements to keep the studio running fell through. Arkane, the Dishonored and Deathloop developer, remains in an ongoing consultation process that Xbox expects to run through the end of the year, with no outcome confirmed yet.

A Reset With No Fixed End Date

Booty framed the announcement as another step in a restructuring effort Xbox has been executing in public since a 1,600-role layoff earlier this year, rather than a new initiative, and acknowledged directly how difficult the day was for departing staff without detailing severance terms or a timeline for when the reset concludes. He said Xbox will hold a company-wide town hall on October 6 to answer further questions, which is the next point at which employees or the public are likely to get more specifics on the Ninja Theory and Arkane consultations, or on how the Activision-led Halo team will be staffed.

“I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them.”Matt Booty, Chief Content Officer, Xbox Game Studios

For players, the practical upshot for now is narrow: no Halo release has been delayed or cancelled by this announcement, and Xbox Game Pass commitments like State of Decay 3 remain unchanged. The bigger shift is structural, and it's the clearest signal yet that Xbox Game Studios' next decade will route more of its biggest franchises through Activision's development pipeline rather than the standalone studios that built them.