Microsoft says it will eliminate 268 roles across Halo Studios, other first-party studios and Xbox Game Studios management and central operations. The cuts, announced September 22, are part of a larger Xbox restructuring that the company says is about three-quarters complete.
The layoffs arrive alongside a major reshuffle of who runs some of Xbox’s best-known franchises. Most notably, Activision will develop the next Halo game.
Activision gets a broader role
Xbox says Activision will add Rare and World’s Edge to its remit. A new, purpose-built Activision team will develop the next Halo title, separate from the ongoing work and plans for Call of Duty. A smaller Halo Studios team will remain to support the existing games and community.
The arrangement would have been difficult to imagine before Microsoft completed its roughly $69 billion Activision Blizzard acquisition in 2023. The FreshWire covered the deal when the UK regulator cleared it. The new structure turns Activision into a much larger organizing center for Xbox’s game development.
Studios move under new umbrellas
Obsidian Entertainment is moving under Bethesda while continuing its existing projects, including Grounded, and a new Fallout project being developed with Bethesda Game Studios. Playground Games and Turn 10 Studios are being combined into one studio focused on Forza and Fable. King will take responsibility for Microsoft Casual Games.
Other changes move in the opposite direction. Compulsion Games and Double Fine returned to their own management in August with their intellectual property, back catalogs and runway funding. Undead Labs has now made a similar transition with a new publisher; Xbox says State of Decay 3 is still planned for a day-one release on Game Pass.
Ninja Theory faces a proposed closure
Xbox says two separate agreements involving Ninja Theory fell through. The company will begin employee consultation on a proposed closure while continuing to explore other options. That does not mean the studio has already closed: the announcement describes a proposal and a consultation process.
For players, the changes raise questions beyond the number of teams on Microsoft’s organization chart. Consolidating studios could simplify management, but the company is also reducing jobs and changing which groups control long-running series. Xbox’s wide-ranging lineup looked very different in The FreshWire’s 2025 Games Showcase roundup. The next releases will show whether this reset helps teams ship games consistently while preserving the different voices that made those studios valuable.
Sources
- Xbox Wire: Continuing Our Reset
- GeekWire: Microsoft cuts jobs and shifts next Halo to Activision
- The FreshWire: UK regulator clears Microsoft’s Activision Blizzard deal
