REDMOND — Xbox is eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer. The company also announced that Activision will develop the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty.

The restructuring includes changes to studio operations and leadership remits. Activision's remit will expand to include World's Edge studio and Rare studio. Bethesda will expand its remit to include Obsidian Entertainment, which will continue its current projects, including Grounded, and work on a new Fallout project in collaboration with Bethesda Game Studios.

King will expand its remit to include Microsoft Casual Games. Playground Games and Turn 10 Studios will merge into one studio focused on the Forza and Fable franchises.

Regarding the future of the Halo franchise, a small team at Halo Studios will continue supporting the Halo community and games in-market. Rob Kostich, President of Activision, addressed the transition in an official statement. "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." Kostich added, "We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community."

Xbox will begin consultation with Ninja Theory employees on a proposed closure while continuing to explore other paths forward. Two separate agreements to sell Ninja Theory fell through. Consultation with Arkane studio remains underway and is expected to continue through the end of the year. Undead Labs has successfully transitioned to independent status with a new publisher and will release State of Decay 3 day one on Game Pass.

These actions follow previous workforce reductions. Xbox laid off 1,600 employees in July. Compulsion Games and Double Fine returned to management with their IP, back catalogs, and runway funding in August.

The actions completed since July, inclusive of studio divestitures, bring Xbox roughly three-quarters of the way through its previously announced restructuring. Xbox planned to reduce its workforce by up to 3,200 employees over the course of its 2027 financial year.

Why It Matters

The elimination of 268 roles represents a continuation of a broader restructuring plan that began earlier in the year. With 1,600 employees laid off in July, the total number of targeted reductions has risen to 3,200 employees. The merger of Playground Games and Turn 10 Studios consolidates resources for the Forza and Fable franchises, while the transfer of Halo development to Activision separates the franchise from its original internal studio structure.

The consultation regarding Ninja Theory shows the volatility facing some acquired studios. Despite previous attempts to secure independence, the studio now faces potential closure as Xbox explores alternative paths. The expansion of remits for Activision, Bethesda, and King indicates a strategic realignment of development responsibilities across the organization. This restructuring aims to streamline operations and focus resources on key franchises, though the final outcomes for affected studios and employees remain subject to ongoing consultations and market conditions.

Timeline

In July 2024, Xbox laid off 1,600 employees. In August 2024, Compulsion Games and Double Fine returned to management with their IP, back catalogs, and runway funding.

In October 2024, Rob Kostich stated, "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." In October 2024, a small team at Halo Studios will continue supporting the Halo community and games in-market. In October 2024, Obsidian will continue its current projects, including Grounded, and work on a new Fallout project in collaboration with Bethesda Game Studios.

What's New

Variety.com reported that the official record states that 268 roles were eliminated across Halo Studios, other first-party studios, and the XGS management and central functions layer. Additional reporting notes that Ninja Theory, founded in 2006, has had a long-standing relationship with Xbox, having developed games such as Heavenly Sword, Enslaved: Odyssey to the West, and Hellblade: Senua's Sacrifice, and the studio was acquired by Microsoft in 2018. It is also noted that Halo Studios, formerly known as 343 Industries, was established in 2009 as a subsidiary of Microsoft to take over the development and publishing of the Halo franchise after Bungie left Microsoft in 2007.

Contextual information reveals that in 2022, Activision Blizzard reported a 12% reduction in its global workforce as part of cost-cutting measures, indicating a pattern of restructuring within the company that could inform expectations for its handling of the new Halo team. Additionally, Ninja Theory's previous attempt to go independent in 2020 failed due to financial and operational challenges, which may have influenced the current decision to enter consultation for a potential closure. According to a 2024 report from the International Game Developers Association (IGDA), the average game development studio experiences a 15-20% workforce reduction during major restructuring phases, which aligns with the current 268 layoffs at Xbox.