Xbox has cut jobs again. On September 22, Matt Booty, head of content for the division, told staff the company is eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer. With this round, the company estimates it has completed three-quarters of the restructuring announced earlier this year.

But the layoffs aren’t the real headline — what comes with them is: Activision is taking over development of the next Halo, Rare and World’s Edge are swapping hands in-house, Playground and Turn 10 are merging, and Ninja Theory is facing closure after two deals to sell the studio fell through.

It’s the year’s second blow, after the 3,200 jobs cut in July, and it won’t be the last: Microsoft has already warned that the restructuring will run through the end of its 2027 fiscal year.

Activision Takes Over Halo

The biggest change affects the brand’s flagship franchise. According to the internal memo, Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. Halo Studios, the studio formerly known as 343 Industries, will keep a small team to support the Halo community and its live games, including Halo Infinite and Halo: Campaign Evolved.

Rob Kostich, Activision’s president, framed it as a statement of intent: “For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place.” He added that the team is already coming together.

That’s no small shift: it comes less than two years after Microsoft moved the franchise’s development to Unreal Engine 5, and after several changes at the top of the studio.

The Org Chart Is Unrecognizable

The reorganization aims, in the company’s words, to “operate with fewer business units” and bring together teams that were already working closely. Here’s how it breaks down:

  • Activision gains World’s Edge (Age of Empires) and Rare (Sea of Thieves), on top of the new Halo.
  • Bethesda takes on Obsidian, which continues its current projects, including Grounded, along with the new Fallout it’s developing together with Bethesda Game Studios.
  • King absorbs Microsoft Casual Games, the unit behind Solitaire, Minesweeper, and Mahjong.
  • Playground Games and Turn 10 are merging into a single studio steering Forza and Fable, after more than a decade of working together.

Who’s Out, and Who’s Left in Limbo

The other side of the plan is studio spin-offs. In August, Compulsion Games and Double Fine returned to their leadership teams’ hands, along with their IP, their catalog, and funding to get started. Undead Labs has now completed the same transition: it’s independent, has a new publisher, and State of Decay 3 will launch day one on Game Pass, with 2027 in its sights. The studio itself acknowledged that independence comes with layoffs among its staff.

The exception is Ninja Theory. Both deals that were on the table fell apart, so Microsoft has opened a consultation process with employees over a proposed closure, though it says it’s still exploring alternatives. With Arkane, the consultation continues and is expected to run through the end of the year.

What This Means If You Play on Xbox

In the short term, little changes for players: announced games stay on track, and the company has called an all-hands meeting for October 6 to talk about what’s next. In the medium term, the picture is different. Xbox’s historic franchises are now split among the major labels that arrived with the Activision Blizzard acquisition, and studios that don’t fit that scheme are being sold off or shut down.

The underlying takeaway is uncomfortable for anyone who’s followed the brand for years: the Xbox that bought up studios checkbook in hand is being consolidated into a handful of very large units, built around Call of Duty, Halo, Forza, Fallout, and the casual catalog as anchors. Whether the result is “one of the best game lineups in our history,” as the company promises, will have to be proven by the releases themselves.