Microsoft is conducting a comprehensive restructuring of its Xbox operations, eliminating over 3,200 jobs with additional cuts of 268 announced on 22 September. The initiative aims to centralise management of game development, reduce the independent authority of Xbox Game Studios, and optimise resource allocation toward key franchises across the gaming portfolio.

The reorganisation redistributes studio control significantly: the Halo franchise shifts to Activision's management from its previous studio-based structure, whilst Rare and World's Edge also transition under Activision. Obsidian becomes integrated within Bethesda's structure, and various other development teams face consolidation or repositioning. The changes enhance influence for Activision, Bethesda, and Blizzard whilst constraining Xbox's historical role as an independent gaming house; some studios, including Undead Labs, have instead separated to operate as independent entities, reflecting Microsoft's strategic pivot away from a unified console-exclusive platform.