Microsoft has announced another major restructuring of Xbox, eliminating 268 roles while reorganizing several of its best-known studios and franchises. In a message sent to Xbox employees on September 22, Xbox Game Studios head Matt Booty confirmed that the cuts affect Halo Studios, other first-party teams and Xbox Game Studios management and central functions. Microsoft says the actions completed since July, including studio divestitures, put it roughly three-quarters of the way through its previously announced restructuring plan.
One of the biggest changes involves Halo. Activision will develop the next Halo title through a newly created team built specifically for the franchise and kept separate from its ongoing Call of Duty development. A smaller group at Halo Studios will remain responsible for supporting the Halo community and games already on the market, confirming that earlier reports of Halo moving under Activision Blizzard were substantially accurate.
Activision’s responsibilities are expanding beyond Halo as well. Microsoft’s World’s Edge organization, which oversees Age of Empires, and Rare will now fall under Activision’s remit. Microsoft says the wider restructuring is designed to reduce the number of separate business units, place groups that already collaborate more closely together and concentrate publishing expertise across fewer organizations.
Bethesda is also gaining another major studio. Obsidian Entertainment will move under Bethesda while continuing its existing projects, including Grounded and a new Fallout game being developed in collaboration with Bethesda Game Studios. Elsewhere, King will take responsibility for Microsoft Casual Games, bringing Microsoft’s casual-game operations together with the Activision Blizzard subsidiary best known for franchises such as Candy Crush.
The restructuring also combines Playground Games and Turn 10 Studios into a single studio focused on the Forza and Fable franchises. Microsoft says the two teams have already worked as creative and franchise partners for more than a decade, and the change formalizes that relationship within one organization. Playground is currently responsible for both Forza Horizon and Fable, while Turn 10 has historically led the Forza Motorsport series.
Microsoft also provided an update on studios it has been attempting to divest. Compulsion Games and Double Fine returned to management in August with their intellectual property, back catalogs and runway funding, while Undead Labs has now completed a similar transition. State of Decay 3 will still launch day one through Game Pass under a new publisher despite Undead Labs becoming independent.
Ninja Theory faces a more uncertain future. Microsoft said two separate agreements to transfer the studio fell through, and it will now begin consulting employees over a proposed closure while continuing to consider other options. The development is particularly notable because Ninja Theory unveiled Senua, a new action-adventure entry in the Hellblade universe, during the Xbox Games Showcase in June and had announced it for 2027.
Consultation with Arkane also remains ongoing and is expected to continue through the end of 2026. Microsoft did not announce a final outcome for the studio or its projects, meaning its future remains unresolved for now. The company says its immediate focus is supporting employees affected by the latest changes before an all-Xbox town hall scheduled for October 6.
The official announcement confirms several developments that had surfaced through reports shortly beforehand, including plans for another round of Xbox layoffs and studio consolidation and Activision taking a larger role in Halo. It also clarifies that Activision’s involvement is not merely supervisory: a purpose-built team will directly develop the next Halo game.
Microsoft has not announced what that Halo project is, when it will be revealed or whether it is related to the previously reported Activision Halo prototype. For now, the confirmed picture is one of the largest structural changes Xbox has made to its first-party organization, with 268 additional jobs eliminated and several major studios moving under new internal leadership.
