Microsoft Moves Halo Under Activision, Cuts 268 Xbox Jobs

Microsoft on Sept. 22 announced a restructuring of its Xbox studio system that moves the Halo franchise under Activision and folds Obsidian Entertainment into Bethesda, according to Ars Technica. The changes include 268 newly announced layoffs and follow a round of sweeping cuts across the gaming division in July.

What is happening to Halo Studios?

Halo Studios, formerly known as 343 Industries, will be reduced to a "small team" focused on supporting the existing player community, Microsoft said, with remaining staff positions eliminated in the new layoff round. Oversight of the Halo franchise itself moves to Activision, the Call of Duty publisher Microsoft acquired roughly three years ago. Activision President Rob Kostich said in a statement provided to Kotaku, as reported by Ars Technica, that the goal is to "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," adding that a "purpose-built team" is already being assembled.

Why is Obsidian moving to Bethesda?

Obsidian Entertainment, the studio behind Fallout: New Vegas, Avowed and The Outer Worlds, will now operate as part of Bethesda rather than as a standalone Xbox studio. Microsoft said the team will continue work on a new Grounded title and a "new Fallout project made in collaboration with Bethesda Game Studios." No completion date or budget figure was disclosed in the announcement covered by Ars Technica.

What other studios are affected?

Activision also gains oversight of Rare, maker of Sea of Thieves, and World's Edge, the team behind the Age of Empires series. Elsewhere, Microsoft Casual Games, publisher of legacy titles including Solitaire and Minesweeper, will report to King, the Candy Crush studio. Playground Games, known for Fable and Forza Horizon, is being merged with Turn 10, maker of Forza Motorsport, into a single team.

What happens to studios still without a buyer?

Microsoft said it continues to look for a buyer for Ninja Theory, developer of Hellblade: Senua's Sacrifice, and Arkane Studios, known for Dishonored and Prey. The company has already divested Compulsion Games, maker of We Happy Few, and Undead Labs, developer of State of Decay. Double Fine, creator of Psychonauts and Kiln, bought itself out to return to independent status it held before Microsoft's 2019 acquisition, Ars Technica reported.

How does this connect to July's Xbox layoffs?

Xbox CEO Asha Sharma said in July that part of the unit's pre-existing problem was that "teams, studios, and functions often operate independently, [making it] harder to work toward a shared goal," according to Ars Technica's account of the announcement. Monday's restructuring appears designed to reduce that independence by consolidating franchises under fewer business units.

Timeline

• 2019: Microsoft acquires Xbox and inherits studios including Double Fine.
• Roughly three years before Sept. 2026: Microsoft completes its acquisition of Activision.
• July 2026: Xbox announces sweeping layoffs as part of a broader "reset."
• Sept. 22, 2026: Microsoft announces Halo moves to Activision, Obsidian joins Bethesda, and 268 additional layoffs.

Microsoft said the moves are intended to "strengthen our franchises and games by operating fewer business units, aligning groups that already," according to the company's statement cited by Ars Technica, though the full text of that rationale was not completely reproduced in available reporting.

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