Microsoft Makes Big Cuts at Halo Studios, Shifts Franchise to Activision

Microsoft is undergoing a significant restructuring of its gaming division as of September 2026, characterized by workforce reductions, studio reassignments, and a fundamental shift in the management of its flagship intellectual property. The company has initiated a new wave of 268 layoffs, primarily impacting Halo Studios and Xbox Games Studio management, as part of a broader reduction plan totaling 3,200 positions.

A central component of this reorganization is the transfer of the Halo franchise from Halo Studios to Activision. Under this new structure, Halo Studios will transition to a support and caretaker role, while a newly assembled team within Activision will assume responsibility for the development and publication of future titles. This move aligns with a wider effort to consolidate various studios under specialized internal umbrellas; for instance, Rare and World’s Edge are moving under Activision, Obsidian is shifting to Bethesda, and Microsoft Casual Games is being integrated into King.

The restructuring also highlights instability within the company’s studio portfolio. A previously planned sale of the UK-based studio Ninja Theory has collapsed, leaving the developer at risk of closure as Microsoft begins a formal consultation process. Additionally, the company is divesting from Undead Labs by returning the studio to its management and is currently evaluating the future of Arkane Lyon. These developments reflect a strategic pivot toward centralizing development resources and streamlining operations across Microsoft’s global gaming assets.