Activision to lead next Halo game as Xbox cuts 268 jobs

Developed over time first seen 2 months ago

Variety · 2 months ago

Xbox has cut a further 268 jobs across Halo Studios, other first-party teams, and central management functions as part of its wider restructuring. The reorganisation will place Activision in charge of developing the next Halo game through a new dedicated team, while a smaller Halo Studios group continues supporting existing games and the player community.

The changes are intended to reduce the number of Xbox business units and consolidate related teams. Bethesda will absorb Obsidian, King will combine with Microsoft Casual Games, and Playground will merge with Turn 10 to focus on Forza and Fable. Xbox says the measures, including studio divestitures, represent roughly three-quarters of its planned workforce reduction of up to 3,200 roles, or 20% of staff; Undead Labs has found a new publishing partner for State of Decay 3, while Ninja Theory faces a proposed closure and consultations with Arkane remain ongoing.

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In short

Xbox has eliminated another 268 roles.
Activision will lead development of the next Halo game.
The cuts are about three-quarters through Xbox’s 3,200-job restructuring.

How this story developed

2 months ago Activision's Halo team will operate as a separate division from Call of Duty production; Undead Labs successfully transitioned to a new publisher, Ninja Theory negotiations have stalled, and Arkane consultations continue through year-end.
2 months ago Activision's remit has extended to include Halo Studios, Rare, and World's Edge.
2 months ago Xbox cut 268 positions and restructured its studios, placing Activision in charge of the next Halo title with a dedicated team whilst enacting consolidations among Bethesda-Obsidian, King-Casual Games, and Playground-Turn 10, as part of a planned 3,200-role workforce reduction.

22 Sep, 15:23Engadget Xbox 'reset' continues with 268 job cuts and Activision making the next Halo game
22 Sep, 15:23PC Gamer Xbox lays off 268 more employees, merges Obsidian into Bethesda, and puts Activision in charge of Halo
22 Sep, 15:24The Hollywood Reporter More Xbox Layoffs Hit as Massive Reorg Continues; Activision to Make Next ‘Halo’ Game
22 Sep, 15:25GamesRadar+ Activision prepares to "make the greatest Halo game ever" as it takes control of the franchise
22 Sep, 15:25Variety Activision to lead next Halo game as Xbox cuts 268 jobs
22 Sep, 15:25Push Square Xbox Confirms Job Losses and Studio Changes, Activision to Make Next Halo Game

Full account

Microsoft's Xbox division has announced a further round of workforce reductions, with 268 positions eliminated across the organisation this week. According to a memo distributed by Matt Booty, the division's chief content officer, the cuts affect Halo Studios, multiple first-party development teams, and the central management infrastructure. This latest reduction forms part of a broader restructuring programme disclosed in July, which aims to eliminate 3,200 positions—representing one-fifth of the division's total workforce—over the course of a year. The company has now completed approximately three-quarters of these planned reductions.

Alongside the redundancies, Xbox has undertaken a significant restructuring of its studio operations. Bethesda Entertainment has integrated Obsidian into its fold, whilst King, the developer behind Candy Crush, is absorbing Microsoft Casual Games. The racing specialists Playground and Turn 10 are merging into a unified studio focused on the Forza and Fable properties. For Halo Studios, a small team will continue providing support for the franchise's existing games and community engagement, though the studio's primary development responsibilities have been substantially curtailed.

The most significant strategic shift has seen Activision assume leadership over the development of the forthcoming Halo title, in addition to taking responsibility for the World's Edge studio and Rare. Activision has signalled that the next Halo instalment will constitute a major, core-series entry developed by a purpose-built team operating separately from its Call of Duty division. This represents a considerable departure from previous arrangements; the franchise was originally created by Bungie before passing to Microsoft's 343 Industries, latterly known as Halo Studios.

Separately, Xbox has advanced with earlier-announced studio divestments. Compulsion Games and Double Fine Productions were spun out as independent entities in August, each retaining intellectual property ownership and securing funding reserves. Undead Labs has similarly achieved independent status and will release State of Decay 3 through a new external publisher on Game Pass day-one, subsequently launching on PlayStation. Ninja Theory's situation remains precarious following the failure of two proposed acquisition arrangements; whilst potential closure has been flagged, Xbox indicated it continues investigating alternative outcomes. Arkane Studios in Lyon remains subject to a consultation period mandated by French employment law, with discussions anticipated to conclude by the end of 2026.

Where outlets differ

From the full account, which is AI-written from the sources:

Source 2 explicitly identifies cost efficiency and profit margin enhancement as drivers for the restructuring; other sources present it primarily as operational consolidation.

Source 4 positions Activision's assumption of Halo development as the day's major consumer-facing announcement and provides historical context on the franchise's prior development; other sources treat it as one reorganisational change among several.

Source 4 specifies the forthcoming Halo game as a 'full-feature, mainline installment'; sources 1 and 2 do not characterise its scope in such terms.

Source 2 emphasises Ninja Theory's closure risk prominently in its headline and opening, includes a direct statement from Undead Labs leadership, and provides greater detail on divestiture terms (IP retention, runway funding); other sources address these matters more briefly.

Source 2 notes State of Decay 3 will launch on PlayStation in addition to Xbox and PC; other sources do not mention the multiplatform aspect explicitly.

Steelman: both sides, in good faith

The strongest fair case each way — we don't pick a winner.

The case for

The restructuring represents necessary business discipline in a competitive industry. Consolidating overlapping studios eliminates inefficiency—combining Playground and Turn 10 aligns related franchises under unified leadership, whilst Activision's live-service expertise could strengthen Halo's ongoing development. By reducing business units, decision-making accelerates and resources concentrate on flagship titles with proven market potential. For a company facing intense competition, this streamlining is essential for long-term competitiveness.

The case against

The layoffs represent significant human cost that merits serious concern, particularly when Microsoft possesses substantial financial resources and could pursue less disruptive alternatives. Large-scale job cuts damage team stability and institutional knowledge, potentially undermining the products these reorganisations claim to improve, whilst existing community support roles are already being reduced. The consolidation approach also risks eroding creative diversity by absorbing independent studios, and Activision's troubled workplace culture and development track record raise legitimate questions about its leadership of Halo's future. These cuts suggest strategic mismanagement rather than inevitable necessity.

Explained simply

Xbox is Microsoft's gaming division, which develops and publishes video games and owns numerous game studios that create popular titles. Games are a major part of Microsoft's business, reaching hundreds of millions of players worldwide. The company's game franchises include some of the most successful and recognisable titles in the industry.

The new chief executive of Xbox, Asha Sharma, announced a major restructuring plan in July that goes beyond simple cost-cutting. The plan involves reorganising which studios develop which games, consolidating some teams, and divesting or closing others. This represents a significant strategic shift in how Microsoft wants to manage its collection of game studios and franchises moving forward.

As part of this restructuring, major franchise responsibilities are being reassigned and studios are being reorganised into new configurations. The changes are reshaping the internal structure of Microsoft's gaming operations to align with Sharma's new strategic direction for the division. These moves affect some of Xbox's most prominent games and its most established studios.