Microsoft is carrying out another major Xbox restructure, cutting 268 roles and moving responsibility for the next Halo game to a new Activision team.
The changes go considerably further than another round of redundancies. Rare and World’s Edge are moving under Activision, Obsidian is being brought beneath Bethesda, Playground Games and Turn 10 are being combined into one studio, and Cambridge-based Ninja Theory is entering consultation over a proposed closure after two potential deals fell through.
Microsoft confirmed the changes in an Xbox Wire update from Xbox chief content officer Matt Booty, describing them as the latest stage of the company’s wider Xbox reset.
Activision will develop the next Halo
The biggest change concerns Halo.
Activision will expand its remit to include both Rare and World’s Edge and will also develop the next Halo title through a new purpose-built team. Microsoft says that team will be separate from the ongoing development and plans surrounding Call of Duty.
Halo Studios is not disappearing completely. A smaller team will remain in place to support the Halo community and games already on the market.
Even so, the significance is difficult to overstate. Halo has been central to Xbox since the original console launched in 2001, and responsibility for the next game moving into Activision’s organisation represents a major change in how Microsoft is managing one of its most recognisable franchises.
As we explored in our 25 Years of Xbox retrospective, Halo helped give Microsoft’s first console an identity from day one. That makes this restructure about far more than where a development team sits on an organisation chart.
268 Xbox roles are being cut
Microsoft says 268 roles are being eliminated across Halo Studios, other first-party studios and the Xbox Game Studios management and central functions layer.
Booty said the actions taken since July, including studio divestitures, put Microsoft roughly three-quarters of the way through its previously announced restructuring. Microsoft set out that wider reset in a July Xbox Wire update.
That means today’s changes are substantial, but they may not represent the end of the wider Xbox reorganisation.
Rare and World’s Edge move under Activision
Activision’s expanded remit does not stop with Halo.
Rare, the studio behind Sea of Thieves, and World’s Edge, which oversees Age of Empires, will also sit beneath Activision as Microsoft reduces the number of separate business units operating across its gaming division.
Microsoft says the aim is to align teams that already work closely together while concentrating publishing expertise across fewer groups.
Playground Games and Turn 10 become one studio
The structure behind Forza is changing too.
Playground Games and Turn 10 Studios will come together as a single studio focused on the Forza and Fable franchises. The two teams have worked together for more than a decade, but the restructure now formally brings that work into one organisation.
Playground is best known for Forza Horizon and is also developing Fable, while Turn 10 has traditionally been responsible for Forza Motorsport.
Microsoft has not announced what the change means for the longer-term direction of the individual Forza series, but structurally the two studios will now operate as one team.
Obsidian moves under Bethesda — with Fallout collaboration confirmed
Obsidian Entertainment is also changing position inside Microsoft’s gaming operation.
Bethesda will expand its remit to include Obsidian, although Microsoft says Obsidian will continue its current projects, including Grounded, alongside a new Fallout project being developed in collaboration with Bethesda Game Studios.
That pairing will inevitably attract attention. Obsidian has its own history with Fallout through Fallout: New Vegas, while Bethesda remains responsible for the mainline Fallout series.
The announcement does not yet tell us how responsibilities will be divided on the new project, so anything beyond the confirmed collaboration would be speculation at this stage.
Ninja Theory faces possible closure after two deals collapse
The most concerning UK element of the announcement surrounds Ninja Theory.
Microsoft says two separate agreements involving the Cambridge-based Hellblade developer fell through. The company will now begin consultation with employees over a proposed closure while continuing to explore other possible paths forward.
That distinction matters: Ninja Theory has not been confirmed as closed. It is entering a consultation process over a proposed closure, with Microsoft saying other options are still being explored.
The update also confirms that consultation involving Arkane remains under way and is expected to continue until the end of the year.
Elsewhere, Compulsion Games and Double Fine returned to management in August with their intellectual property, back catalogues and runway funding. Undead Labs has now transitioned on similar terms and will release State of Decay 3 through a new publisher, while the game remains set to launch day one on Game Pass.
This is a fundamental reshaping of Xbox’s first-party operation
Taken individually, any one of these changes would be significant. Together, they represent one of the biggest restructures of Microsoft’s first-party gaming organisation in years.
Halo development moving into Activision is the headline shift, but the wider pattern matters just as much: Microsoft is consolidating studios beneath a smaller number of major publishing organisations rather than maintaining as many standalone management structures.
That comes at the same time as Microsoft is redefining Xbox more broadly. Our recent analysis of Xbox’s next-generation Project Helix strategy showed a platform already moving beyond the traditional idea of one console generation and one fixed hardware model.
Now its internal studio structure is changing just as dramatically.
Tech Torque Verdict
This is not simply another Xbox layoffs story.
The loss of 268 roles is serious in its own right, but the scale of the organisational changes makes this a much bigger moment for Microsoft’s gaming business. Activision taking responsibility for the next Halo, Rare and World’s Edge moving beneath it, Obsidian shifting under Bethesda and the two Forza studios becoming one team collectively redraw the map of Xbox Game Studios.
The immediate question is what these new structures mean for the games themselves. For Halo in particular, this is a major break with the franchise’s recent development model.
Ninja Theory’s position is more urgent. Until consultation concludes, the Hellblade studio’s future remains unresolved — and Microsoft’s own wording makes clear that closure is only proposed at this stage, not completed.
With Microsoft saying the wider reset is only around three-quarters complete, there may still be more changes to come.
