Xbox is eliminating 268 roles and reorganizing several of its first-party studios, with Activision set to develop the next Halo game through a newly formed team separate from Call of Duty.
The changes were confirmed in a September 22 employee memo from Xbox chief content officer Matt Booty, which the company published on Xbox Wire. The job cuts affect Halo Studios, other first-party developers, and Xbox Game Studios management and central functions.
Booty said the actions taken since July, including studio divestitures, put Xbox roughly three-quarters of the way through its previously announced restructuring. In July, Xbox said it planned to reduce its workforce by approximately 3,200 roles during fiscal year 2027, including about 1,600 positions in the first round.
Activision will develop the next Halo game
Activision’s expanded responsibilities will include Rare and World’s Edge, while a purpose-built Activision team will lead development of the next Halo title. Xbox said that group will operate separately from Call of Duty’s continuing development.
A smaller team will remain at Halo Studios to support the Halo community and games already on the market. Xbox did not announce the next Halo game’s title, platforms, or release window in the memo.
Bethesda will take responsibility for Obsidian Entertainment, which is continuing work on Grounded and a new Fallout project with Bethesda Game Studios. King will oversee Microsoft Casual Games, bringing the two casual-game operations together.
Playground Games and Turn 10 Studios will also combine into a single studio focused on the Forza and Fable franchises. Xbox described the move as formalizing a creative partnership that has existed for more than a decade.
Ninja Theory faces a proposed closure
The memo also provided an update on studios Xbox had been seeking to divest. Compulsion Games and Double Fine Productions returned to their management in August with their intellectual property, back catalogs, and runway funding. Undead Labs has now completed a similar transition and will release State of Decay 3 with a new publisher while retaining its planned day-one Game Pass launch.
Xbox said two separate agreements involving Ninja Theory fell through. The company will begin consulting employees on a proposed closure while continuing to consider alternatives. Consultation concerning Arkane remains in progress and is expected to continue through the end of 2026.
The restructuring follows Xbox’s July announcement that it would reduce management layers, cut vendor spending, and narrow its content portfolio. Xbox has not provided a studio-by-studio breakdown of the 268 roles affected in this latest round.
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