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

Microsoft's gaming division announced another round of layoffs and a sweeping reorganization on September 22, 2026, marking a continued transformation of its Xbox business. The news, reported by Stephen Totilo of Game File, centers on 268 job cuts, mostly at Halo Studios (formerly 343 Industries), which recently shipped Halo: Campaign Evolved. Some cuts also hit Xbox Game Studios management. These reductions fall within the 3,200 layoffs announced in July, about half of which had already been carried out by then.

The most consequential change involves the Halo franchise. The shrunken Halo Studios will stop leading development of the series and will instead act as a caretaker and support team for existing projects. The next Halo game will be built within Activision, which will also publish it, by a team not yet identified. It is unclear whether that team will come from existing Call of Duty studios or be newly formed. Activision president Rob Kostich said a purpose-built team is already being assembled with the goal of making the greatest Halo game ever.

Studio fates are also shifting. A previously signaled sale of UK-based Ninja Theory, maker of the Hellblade games, fell through, as did a second attempted deal, and Microsoft is starting a consultation process that could end in closure. Undead Labs, developer of State of Decay, is being sold back to its management. Arkane Lyon remains slated for sale or closure with no update.

Several studios are being moved out of the central Xbox Game Studios group. Rare and World's Edge (Age of Empires) will report to Activision, Obsidian to Bethesda, and Microsoft Casual Games to King. Turn 10 (Forza) will merge with Playground Games (Forza Horizon, Fable). The article's deeper analysis sits behind a paywall.