Microsoft eliminated 268 roles at Xbox on September 22 and reorganised its first-party studios, handing the Halo series and two development teams to Activision. Xbox chief content officer Matt Booty set out the changes in a message to staff that was published on Xbox Wire under the title "continuing our reset".
The cuts fall "across Halo Studios, other first-party studios, and the XGS management and central functions layer", Booty wrote. He said the moves since the summer put the company well into the process it announced in July: "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring." The stated aim is to strengthen Xbox's franchises "by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise".
Where the studios have landed
Activision takes custody of the Halo series, of Sea of Thieves developer Rare and of Age of Empires studio World's Edge. Booty said the next Halo game will be built by "a new, purpose-built team that is separate from ongoing development and plans for Call of Duty", while "a small team at Halo Studios will continue supporting the Halo community and games in-market". Rock Paper Shotgun noted that Halo Studios, founded as 343 Industries in 2007, is being reduced to that support role.
Obsidian Entertainment moves under Bethesda. "Bethesda will expand its remit to include Obsidian, which will continue its current projects, including Grounded, as well as the new Fallout project made in collaboration with Bethesda Game Studios," Booty wrote. Forza Horizon developer Playground Games and Forza Motorsport developer Turn 10 are merging into a single team, formalising a partnership that has run for more than a decade and that also covers the next Fable. Microsoft Casual Games has been absorbed by King.
Booty also updated the studios Microsoft parted with in July. Undead Labs has found a new publisher for State of Decay 3, as Compulsion Games and Double Fine did before it. Hellblade developer Ninja Theory is in consultation over a likely closure after two sale deals fell through, and Arkane's future remains undecided, with consultation expected to run through the end of the year.
Named losses and what is still to come
Individual layoffs surfaced through the people affected. Juan Vaca, a story director at Gears of War developer The Coalition, confirmed he was cut after four years at the company, a week before Gears of War: E-Day enters early access and days after he publicly marked the game going gold, IGN reported. Halo Studios cinematic director Josh Daniels was laid off a day after a promotion.
GameSpot reported that Xbox CEO Asha Sharma, who replaced Phil Spencer this year, has attributed the overhaul to an unhealthy business, citing Microsoft's Game Pass bet, the shift away from exclusives and a weakening core business alongside what she called the industry's most severe hardware crisis. July's announcement covered 1,600 immediate layoffs and a further 1,600 during the fiscal year ending June 30, 2027; with these 268, GameSpot counted 1,332 cuts still to come.
Sea of Thieves players reacting on Reddit told IGN they expect Rare to be turned into a Call of Duty support studio, pointing to Activision's handling of teams it has absorbed before.
