Microsoft confirmed on September 22, 2026 that 268 employees are losing their jobs across Halo Studios, other first-party developers, and the Xbox Game Studios management and central functions layer, alongside a restructuring that hands development of the next Halo game to Activision, as confirmed via Xbox’s official Xbox Wire post.
Here’s the context: These cuts fall under Xbox’s previously announced Reset plans, and Matt Booty says the company is roughly three-quarters of the way through that process. Alongside the layoffs, several development teams are being folded into larger organizational umbrellas – Rare and World’s Edge now sit under Activision, Obsidian moves under Bethesda, Microsoft Casual Games falls under King, and Playground Games and Turn 10 Studios are merging into a single developer.
This is the latest chapter in a consolidation effort that has been reshaping Xbox’s first-party lineup for much of 2026, and it follows a pattern of studio realignment covered in our breakdown of Xbox’s broader studio restructuring. It also arrives amid continued workforce pressure across Microsoft’s gaming division, echoed in our coverage of recent Bethesda Montreal layoffs.
Honestly, the headline move here isn’t the layoff count – it’s that Halo’s next mainline entry is no longer being built by the studio that carries its name. Activision now holds responsibility for the franchise’s next chapter, with Playground and Turn 10 combined and multiple teams absorbed into bigger structures, which reads less like trimming fat and more like Xbox deciding it needs fewer, larger organizational units to manage its portfolio. Whether that consolidation produces a stronger Halo or just a more centralized one is the real open question, and it’s worth noting that any framing of this as Xbox chasing fewer blockbuster-scale projects is analysis, not something Microsoft has stated outright.
Microsoft’s own language on the Halo handoff is specific enough to matter. “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,” Microsoft said. “A small team at Halo Studios will continue supporting the Halo community and games in-market.”
The parallel studio changes break down as follows:
- Rare and World’s Edge – now part of Activision
- Obsidian – now part of Bethesda
- Microsoft Casual Games – now under King
- Playground Games and Turn 10 Studios – merging into one developer
- Activision – now developing the next Halo title
- Halo Studios – retains a small team for community and in-market game support
What remains unclear is the fate of two other studios caught in this wave. Microsoft is beginning talks to close Ninja Theory after negotiations with two separate firms to sell the Hellblade developer fell through, while the company remains in consultation talks with Arkane over its future. The primary announcement gives no timeline for either process, nor does it specify the release window, scope, or leadership of Activision’s new Halo team.
What to watch: Booty said Xbox will hold an all-team town hall on October 6, where the company plans to reflect on its progress and look ahead to what he called one of the strongest game lineups in Xbox’s history. Expect that session to bring further clarity on Ninja Theory’s status, the Arkane consultation, and how the new Activision-led Halo team is staffed and scoped.
Is a purpose-built Activision team the right custodian for Halo’s next entry, or does this dilute the franchise further from the studio built to carry it? And does merging Playground Games with Turn 10 strike you as smart consolidation or a warning sign for Forza and Fable’s creative direction? Keep an eye on GameLuster’s coverage of the October 6 town hall for whatever comes next.
