Halo handed to Activision: what the latest Xbox studio reorganisation changes

The facts

On 22 September 2026, Matt Booty, Xbox’s head of content, sent all of the division’s employees a message, published the same day on Xbox Wire, the brand’s official site, under the title “Continuing Our Reset”. In it, he sets out three sets of decisions.

The first is the elimination of 268 jobs, spread across Halo Studios, other internal studios and the central and management functions of Xbox Game Studios. The second is a reorganisation of the studios, with the stated aim of operating with fewer entities, bringing together teams that already work together and concentrating publishing expertise. In practice:

• Activision takes over World’s Edge, the Age of Empires studio, as well as Rare. It will also develop the next Halo, entrusted to a team created for the purpose and separate from those working on Call of Duty. A small team remains at Halo Studios to support the community and the games already on sale.
• Bethesda takes in Obsidian, which continues work on Grounded and on a new Fallout project led with Bethesda Game Studios.
• King, the publisher of Candy Crush, absorbs Microsoft Casual Games.
• Playground Games and Turn 10 merge into a single studio dedicated to Forza and Fable.

The third set concerns studio divestments. Compulsion Games and Double Fine regained their independence in August, with their IP, their back catalogues and transitional funding. Undead Labs followed on comparable terms and will release State of Decay 3 with a new publisher, on Game Pass from day one. By contrast, two deals to take over Ninja Theory fell through: a consultation of employees on a proposed closure is beginning, while other options are still being explored. The consultation under way at Arkane, for its part, is due to continue until the end of the year. An all-hands meeting of Xbox teams is scheduled for 6 October.

A 3,200-job plan launched in July

These announcements extend the plan presented on 6 July 2026 by Asha Sharma, CEO of Xbox, in a message titled “Resetting XBOX”. Game Developer sees it as the largest restructuring in the brand’s history: around 3,200 jobs cut over the course of fiscal year 2027, including around 1,600 on the day itself, and four studios set to leave the group. In France, Arkane Lyon was at the same time opening a consultation procedure to examine the studio’s future.

The justification fitted into a single sentence: “Our business today is not healthy”, she wrote. Asha Sharma cited margins three to ten times lower than those of comparable companies; bets on Game Pass, multiplatform releases and a broader catalogue that had not grown at the expected pace; and a hardware crisis she judged to be the most serious in the industry’s history. Game Developer links this crisis to rising memory prices. The same message stated that, in a typical year, Xbox had lost 64 cents for every dollar invested, and that work could pass through as many as 14 layers of hierarchy, which management wants to cut to five at most.

On 22 September, Matt Booty reckons Xbox is “roughly three-quarters of the way” through this plan, divestments included. GamesIndustry.biz infers that around 800 cuts are still to come. According to GeekWire, Microsoft cut fewer than 600 jobs worldwide in total that day, including 277 in Washington State according to the official filing submitted afterwards.

Three homes in twenty-five years

Halo was born at Bungie with Halo: Combat Evolved in 2001. After Bungie and Microsoft parted ways, 343 Industries was founded in 2007 to take over the series, GamesIndustry.biz recalls. Bungie then launched Destiny, published by Activision, before being bought by Sony in 2022.

343 Industries has run into several difficulties along the way. According to the same outlet, the development of Halo Infinite, released in 2021, was long and difficult, partly because of the in-house Slipspace engine. Major layoffs followed in 2023. In 2024, the studio took the name Halo Studios and announced its switch to Unreal Engine, mentioning several new projects. Only one has been unveiled and released: Halo: Campaign Evolved, a remake of the 2001 campaign released in July 2026. GamesIndustry.biz believes this slow release pace may have weighed in the decision, set against Call of Duty’s annual releases.

Activision, bought by Microsoft in 2023 for $68.7 billion according to GeekWire, thus becomes the third house to run the main series. Its president, Rob Kostich, set out the goal in a statement quoted by GamesIndustry.biz: to “make the greatest Halo game ever”. He adds that building the team has already begun. The same outlet notes that Treyarch, one of the Call of Duty studios, announced the previous week that it wanted to move on to something else, and that Activision had committed to reviewing Call of Duty’s release cadence after disappointing sales.

Rare is changing hands too. Founded in 1985 and part of Xbox since 2002, the British studio now looks after Sea of Thieves; its Everwild project was cancelled in the 2025 cuts.

What remains to be confirmed

No timeline, platform or team size has been given for the next Halo. The fate of Ninja Theory, which is working on Senua, depends on a consultation whose outcome is not known, as does that of Arkane. Finally, the last quarter of the July plan has not been detailed. GamesIndustry.biz names Blizzard, The Coalition and inXile among the studios spared so far, and reports that an internal email states that Blizzard is not affected by the 22 September announcements.

Why it matters

According to GamesIndustry.biz, Halo and Call of Duty are Microsoft’s two main shooter franchises. Moving Halo to Activision brings them together under the same publisher, which the outlet connects with Asha Sharma’s stated intention to bet on strong franchises and reduce the fragmentation of the organisation. In July, she promised a return to growth in 2027. For the next Halo, no release date has yet been announced.

Archive note

• 22 September 2026: 268 jobs cut; the next Halo goes to a new team at Activision, which also takes over Rare and World’s Edge; Obsidian moves under Bethesda, Playground and Turn 10 merge.
• “Resetting XBOX” plan of 6 July 2026: around 3,200 jobs cut over fiscal year 2027, including around 1,600 on the day itself; on 22 September, Microsoft said it was three-quarters of the way there.
• Ninja Theory: closure proposed after two acquisition deals fell through; Arkane consultation expected to run until the end of the year; Xbox all-hands meeting set for 6 October.