Microsoft hands Xbox's biggest franchises to three other publishers it owns
Halo development goes to a new team inside Activision, Rare and World's Edge move with it, and Obsidian now reports to Bethesda. Xbox Game Studios keeps a handful of teams and 268 fewer roles.
The Product Desk
What happened
- Halo development moves to Activision under a new purpose-built team kept separate from the Call of Duty teams, while Halo Studios stays on as a small team supporting games in-market.
- Playground and Turn 10, the Fable and Forza studios, merge into one, leaving Xbox Game Studios with a handful of teams including The Coalition and InXile.
- The cuts are part of the second wave of Asha Sharma's reset, which laid off 1,600 people in July with 1,600 more planned over the following fiscal year.
Why it matters
- Who has to decide decision Partners whose agreements sat with Xbox Game Studios now have counterparties under Activision, Bethesda or King, so approval paths and slate priorities have to be re-mapped before the next milestone.
- Who's exposed exposure Studios that kept their reporting line into Xbox Game Studios carry the rest of the second wave, roughly 1,332 roles that have not been named.
- What it sets up precedent Shipping a well-received game did not keep a studio intact. Halo Studios is now a small team supporting games in-market.
Next story · Invest · Sep 23
Microsoft puts Halo under the publisher it paid $69 billion forConfirmed3 publishers
For anyone holding a co-dev, porting or publishing contract inside Microsoft's gaming org, the line to read in the announcement is the third group in the cut list. Microsoft says the 268 eliminated roles come from Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer [1]. The company did not say how the 268 split across those three groups.
The reassignments are franchise-level. Activision, which Microsoft bought just under three years ago [20], now runs Halo development through a new team kept separate from the Call of Duty teams [2], and it takes Rare and Age of Empires studio World's Edge with it [4]. Obsidian leaves Xbox Game Studios for Bethesda Game Studios and a Fallout mandate [5]. Minesweeper, Solitaire and the rest of the casual portfolio go to King [8]. Playground and Turn 10, the Fable and Forza teams, merge into one [9]. What remains in Xbox Game Studios is a handful of studios, among them The Coalition and InXile [17].
The reset laid off 1,600 people in July, with 1,600 more planned across the following fiscal year, around 3,200 in all [6][7]. The 268 announced now come out of that second wave, which leaves roughly 1,332 roles still unnamed [24]. Two studios have already left the company outright: Double Fine and Compulsion went independent [10].
Xbox CEO Asha Sharma's stated reason in July was structural. She said part of the pre-existing problem was that teams, studios and functions often operated independently, making it harder to work toward a shared goal [13]. Ars Technica says the restructuring is designed to reduce that independence at the teams behind the biggest franchises [16]. Sharma's goal, per The Verge, is a company reaching "more than a billion people each day" [23], with investment concentrated on Minecraft, Halo and Candy Crush and Game Pass spending under review [19].
"For Halo, our goal is clear: 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," Activision president Rob Kostich said in a statement provided to Kotaku [14]. He said the purpose-built team is already being assembled [15]. Halo Studios, formerly 343 Industries, shipped Halo: Campaign Evolved [11], which The Verge calls a well-received Combat Evolved remake released in July [12]. It is now a small team supporting the community and games in-market [3].
Microsoft still plans a future in the hardware business, The Verge reports [21], and the same piece says the plan for exclusives is hard to follow [22].
What matters for an Xbox dependency is whether the franchise is on the named focus list, and whether the counterparty has moved under a publisher with its own slate and its own budget. A deal attached to Halo or the casual portfolio has new approvers and a funded roadmap. A deal attached to a studio still sitting inside Xbox Game Studios sits against the unnamed remainder of the second wave. Gears of War: E-Day ships next month from The Coalition, which is still inside Xbox Game Studios [18][17].
What to watch
- Whether the roughly 1,332 unannounced second-wave cuts land on the studios still inside Xbox Game Studios after Gears of War: E-Day ships.
- Any published change to Game Pass day-one terms as Sharma's review of that spending concludes.
- Named leads or a ship window for the purpose-built Halo team Activision says it has begun assembling.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence78
- Adoption
- Not scored
- Hype gap+15
- Incentives55
- Confidence74
Perspective Coverage
7 publishers- Builder
- Builder 23%
- Operator
- Operator 47%
- Investor
- Investor 30%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Microsoft announced it is "eliminating 268 roles across Halo Studios, other first-party studios, and the [Xbox Game Studios] management and central functions layer."
- [2]
Development of Halo is moving over to Activision, helmed by "a new, purpose-built team" that is separate from the Call of Duty teams.
- [3]
Halo Studios will continue to exist, for now, primarily as a support studio, reduced to a "small team" that "will continue supporting the Halo community and games in-market."
- [4]
Sea of Thieves developer Rare and Age of Empires studio World's Edge are both moving under the Activision umbrella.
- [5]
Obsidian is being moved out from Xbox Game Studios and under Bethesda Game Studios, where it will refocus on the Fallout franchise.
- [6]
The Xbox "reset" outlined by new CEO Asha Sharma kicked off with 1,600 employees laid off in July, with 1,600 more planned over the following fiscal year.
- [7]
The planned cuts impact around 3,200 workers.
- [8]
All of Microsoft's casual games, like Minesweeper and Solitaire, are moving under Candy Crush developer King.
- [9]
Playground and Turn 10, the studios responsible for Fable and Forza, are merging into one.
- [10]
Double Fine and Compulsion were spun off from the company and went independent.
- [11]
Halo Studios, formerly 343 Industries, recently released Halo: Campaign Evolved.
- [12]
The Verge describes Halo Studios' July release as a well-received Combat Evolved remake.
- [13]
Xbox CEO Asha Sharma said part of the pre-existing problem in the gaming unit was "teams, studios, and functions [that] often operate independently, [making it] harder to work toward a shared goal."
- [14]
"For Halo, our goal is clear: 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," Activision President Rob Kostich said in a statement provided to Kotaku.
- [15]
"We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community," Kostich said.
- [16]
Ars Technica describes the announced restructuring of internal studios as seemingly designed to reduce the independence of the teams behind some of gaming's biggest franchises.
- [17]
Xbox Game Studios today consists of just a handful of studios such as Gears of War developer The Coalition and Wasteland studio InXile.
- [18]
Gears of War: E-Day launches next month.
- [19]
The plan is to focus on known hits like Minecraft, Halo and Candy Crush while reevaluating how much the company is investing in its Game Pass subscription service.
- [20]
Microsoft officially purchased Activision just under three years ago.
- [21]
Xbox still plans for a future in the hardware business.
- [22]
The Verge writes that the console became increasingly unimportant and that it is hard to follow what the plan is for exclusives.
- [23]
According to Sharma, the reason for the changes is to eventually become a company that reaches "more than a billion people each day."
- [24]
With 268 roles named out of the planned second wave of 1,600, roughly 1,332 of that wave have not been announced.
Sources
7 independent publishers whose own reporting we read for this story.
- arstechnica.comShuffling the deck chairs: Xbox continues its "reset" with dramatic restructuring
2 articles · September 22, 2026
- mashable.comXbox lays off more than 250 employees amid studio restructurings | Mashable
1 article · September 22, 2026
- mobilesyrup.comXbox keeps cutting with 268 more layoffs, hands Halo to Activision
1 article · September 22, 2026
- notebookcheck.netMicrosoft lays off Xbox employees in major studio reorganization - Notebookcheck News
1 article · September 23, 2026
- phandroid.comXBOX Continues its Restructuring Efforts with More than 260 Layoffs and Major Studio Shakeup - Phandroid
1 article · September 22, 2026
- theverge.comXbox is barely Xbox anymore
1 article · September 22, 2026
- thurrott.comXbox Announces More Job Cuts and Studio Reorgs, With Next Halo Game Developed by Activision
1 article · September 22, 2026
Topics and entities
Topics
- Video game industry layoffs
- Game Studio Consolidation