Xbox Cuts 268 Jobs as Activision Takes Charge of Next Halo Game

Xbox's broad restructuring effort is continuing with another 268 job cuts, significant changes to its internal studio structure and an uncertain future for Ninja Theory. The latest actions affect Halo Studios, other first-party development teams, and parts of the Xbox Game Studios management and central functions organization.

The reductions are part of the "reset" Xbox announced during the summer of 2026. In July, the company cut 1,600 roles and said it intended to remove a further 1,600 positions over the following year while pursuing greater operational efficiency and stronger profit margins. Xbox leadership now says the steps taken since July, including studio divestitures, have completed roughly three-quarters of that previously announced restructuring.

The changes are not limited to staffing. Several Xbox-owned teams are being reassigned, merged, spun out, or considered for sale. Perhaps the most consequential creative shift is that a newly formed team under Activision will develop the next Halo game, while Halo Studios retains a smaller group focused on supporting the existing community and titles already on the market.

Activision will lead development on the next Halo

Halo has long been one of Xbox's defining franchises, so moving its next major game to a new Activision-led team is a major organizational change. Halo Studios is not being closed outright, but it is expected to be substantially reduced. Its remaining staff will continue work tied to the live Halo audience and currently released games.

For useful background on this topic, read Fable-studio/">Xbox Merges Playground Games and Turn 10 Into One Forza and Fable Studio.

The decision does not come with announced details on the next game's setting, release window, platforms, engine, multiplayer plans, or whether it will follow directly from past entries. Xbox has only confirmed the high-level production change: a new team operating under Activision will make the next Halo title.

Activision's expanded responsibilities also extend beyond Halo. The publisher will oversee Rare as well as World's Edge, the studio associated with the Age of Empires series. It is a substantial concentration of responsibility under one branch of Microsoft Gaming, putting an Xbox legacy franchise, a major strategy label, and the long-running work of Rare under Activision's organizational umbrella.

For players, the immediate effect may be limited, since no new game announcements or release commitments accompanied the restructuring news. Still, the internal move will invite close attention from the Halo community. The series has historically carried enormous expectations for Xbox, and the next installment will arrive following a period of transition for both the franchise and the company behind it.

For another perspective on this story, read Xbox Cuts 268 Jobs as Activision Takes Lead on Next Halo Game.

Ninja Theory faces a proposed closure

The most worrying part of the announcement concerns Ninja Theory. Xbox had attempted to sell the studio, but two separate agreements to do so fell apart. With those efforts unsuccessful so far, the company has begun consultation with employees on a proposed closure while saying it will continue to look for other possible solutions.

That wording leaves some room for change, but no outcome is guaranteed. A consultation process means the studio is not described as already closed; however, it is now at serious risk of shutting down unless another path is found. Xbox's statement indicates it remains open to alternatives even as it proceeds with the proposed-closure process.

Ninja Theory is one of the most distinctive teams within the Xbox portfolio, known for cinematic, character-focused games including Hellblade: Senua's Sacrifice, Senua's Saga: Hellblade II, Enslaved: Odyssey to the West, and DmC: Devil May Cry. Its possible closure is especially notable because it follows years in which Microsoft built a large collection of studios through acquisitions, only to later reduce, divest, or reorganize parts of that network.

There has been no confirmation of a buyer, no announced plan to make Ninja Theory independent, and no commitment that its current projects or future concepts will continue. Until the consultation concludes or Xbox identifies a different outcome, the studio's situation remains unresolved.

More Xbox studios are being moved, merged, and divested

Xbox's reorganization reaches across the company's portfolio. Obsidian Entertainment, which was recently assigned a new Fallout game, is moving under Bethesda's umbrella. The new reporting structure places the Pillars of Eternity, The Outer Worlds, and Avowed developer closer to the organization responsible for Bethesda's own role-playing properties.

That change is particularly meaningful given Obsidian's newly stated Fallout assignment. The studio has previous experience with the universe through Fallout: New Vegas, and its movement under Bethesda creates a clearer connection between the developer and the broader Bethesda family. However, no details have been provided about the new game's scope, schedule, or how the teams will collaborate.

King, meanwhile, will oversee Microsoft Casual Games. The move aligns Microsoft's casual gaming operations with the company best known for operating major mobile games, including Candy Crush. No specific projects were announced as part of that transition, but the structure suggests Xbox is continuing to organize teams around areas of experience and audience reach.

Playground Games and Turn 10 Studios are also being merged. The combined organization will remain focused on Forza and Fable, two of Xbox's best-known series. Playground has become closely associated with Forza Horizon while also developing the upcoming Fable, while Turn 10 has long led the Forza Motorsport side of the franchise. The merger brings those connected racing brands into one studio structure while preserving a stated commitment to both Forza and Fable.

Elsewhere, Compulsion Games and Double Fine Productions have been spun out as independent studios. Xbox is providing runway funding and allowing both teams to retain rights to their intellectual property and back catalogs. Those terms are important: the developers will leave Xbox's internal studio group, but they will do so with resources intended to support their transition and with continued control of the work they created.

Microsoft has additionally divested Undead Labs. Despite that ownership change, State of Decay 3 is still planned for Game Pass and will be released through a new publisher. The announcement does not identify that publisher or provide a launch date, but it confirms that the game remains in the pipeline despite the divestiture.

Arkane Lyon enters a consultation process

Arkane Studios' Lyon team is another developer whose future is under review. Xbox is seeking to divest the France-based studio, which requires a consultation period under French law. During that process, options including a sale, a spinout, or closure must be considered.

The consultation is expected to run through the end of 2026. That timeline means there may not be a quick answer on Arkane Lyon's ultimate status. The studio is known for work such as Dishonored and Deathloop, making its future another significant issue for players following Microsoft's first-party strategy.

Like Ninja Theory's case, the key point is uncertainty. Xbox has not declared a completed sale, independent transition, or shutdown for Arkane Lyon. The company is exploring a divestiture while the legally required consultation continues, and the final result will depend on what options emerge during that period.

A reset with consequences for Xbox's creative identity

The latest 268 job cuts are modest in comparison with July's 1,600 layoffs, but the accompanying studio changes give this round much wider consequences. Xbox is reshaping who manages some of its most recognizable franchises, where veteran developers fit within the company, and whether certain studios will remain part of the organization at all.

For Microsoft, the stated goal is a more efficient business with improved margins. For employees, the impact is immediate and personal, from lost roles to extended periods of uncertainty. For players, the longer-term results will be measured in the games that survive the transition, the teams able to continue independently, and the creative direction of franchises including Halo, Fallout, Forza, Fable, Age of Empires, and State of Decay.

Xbox has made clear that its restructuring is not yet complete. With approximately one-quarter of the previously announced effort still remaining, further changes may follow. For now, the confirmed picture is one of consolidation: Activision gains a central role in Xbox's portfolio, Halo Studios becomes smaller, multiple teams change reporting lines, and the futures of Ninja Theory and Arkane Lyon remain unsettled.