Xbox Lays Off 268 More Employees and Transfers Halo Franchise to Activision

Following an extensive wave of structural cutbacks earlier this year that saw 1,500 positions eliminated, Xbox has enacted another painful round of downsizing. The corporation has officially confirmed the layoff of 268 employees spanning its internal development teams, Xbox Game Studios management, and central infrastructure divisions. Most notably, Halo Studios faces severe cutbacks, with Activision stepping in to helm the development of the next mainline Halo installment.

This major industry shift was detailed in an Xbox Wire publication titled “Continuing Our Reset,” authored by Xbox Executive Vice President and Chief Content Officer Matt Booty. The update outlines three primary strategic shifts, beginning with confirmation of the latest layoffs and noting that the organization is roughly three-quarters of the way through its previously outlined corporate overhaul.

Furthermore, Booty revealed sweeping changes to internal studio oversight. Activision’s portfolio is expanding to absorb World’s Edge (creators of Age of Empires) and Rare (developers of Sea of Thieves), alongside establishing a dedicated internal unit tasked with building the future of the Halo franchise. Meanwhile, a skeleton crew at Halo Studios will remain operational solely to maintain live community engagement and support existing titles. Handing the reins of Halo over to the powerhouse behind Call of Duty marks a monumental turning point, placing the two historical titans of the first-person shooter genre under a single corporate umbrella and raising fresh questions about industry competition.

Alongside these headline-grabbing changes, several other teams are undergoing significant structural realignment. Below is the direct breakdown of studio reallocations shared by leadership:

• Bethesda’s supervisory scope will expand to incorporate Obsidian Entertainment. Obsidian will maintain its active projects—including Grounded—while also collaborating alongside Bethesda Game Studios on an upcoming Fallout initiative.

• King will broaden its oversight to absorb Microsoft Casual Games, uniting two global powerhouses specializing in casual game development and live-service management.

• Playground Games and Turn 10 Studios are merging into a unified powerhouse dedicated entirely to the Forza and Fable franchises. Having operated as close creative allies for over a decade, this formal integration consolidates their collaborative efforts into a single team.

The closing statements addressed ongoing studio divestitures previously set in motion. Compulsion and Double Fine have officially transitioned into independent operating entities, while Undead Labs has secured a partnership with a new publisher though it remains committed to bringing State of Decay 3 to Game Pass next year. Conversely, negotiations regarding “two separate agreements for Ninja Theory ultimately collapsed,” prompting Xbox to initiate formal closure consultations. Arkane faces a similar uncertain trajectory, with leadership estimating that analogous evaluations will persist through the conclusion of the calendar year.

While this entire corporate restructuring brings disheartening news for the industry at large, the downsizing hits the Halo community particularly hard. Halo: Campaign Evolved served as a recent cover story, and critics warmly welcomed the finished experience upon release, yet even critical acclaim failed to insulate the team from Xbox’s relentless wave of downsizing. Meanwhile, original Halo creators Bungie have likewise parted ways with a vast majority of the Destiny 2 development workforce, despite recently outlining ambitious strategies to reinstate vaulted Destiny 2 content.