Microsoft has announced the next stage of its Xbox restructuring: another 268 jobs are being cut, Activision will develop the next Halo game, Obsidian is moving under Bethesda, and Hellblade developer Ninja Theory now faces a proposed closure after two attempts to sell the studio collapsed. Here's everything that changed, studio by studio, and what it means for Xbox players.
Key points
Job cuts: 268 roles across Halo Studios, other first-party studios and Xbox Game Studios management.
Halo: the next game will be made by a new Activision team, separate from Call of Duty.
Moving to Activision: Rare (Sea of Thieves) and World's Edge (Age of Empires).
Moving to Bethesda: Obsidian (Grounded, and a new Fallout project).
Merging: Playground and Turn 10 become one Forza and Fable studio; King absorbs Microsoft Casual Games.
Ninja Theory: two sale deals fell through; staff consultation on a proposed closure has begun.
268 more jobs cut, and the reset is three-quarters done
The latest cuts were announced in a memo from Xbox chief content officer Matt Booty, published on the official Xbox news site under the title "Continuing Our Reset". The 268 roles span Halo Studios, other first-party studios and the management and central teams that sit above them.
It's another step in a much bigger plan. In July, Microsoft said it expected to cut around 3,200 gaming jobs as part of what it called the most significant restructure in Xbox history. According to Booty, Xbox is now roughly three-quarters of the way through that programme, including earlier layoffs and the studios it has already sold or spun off. More changes are still to come.
Activision will make the next Halo game
The biggest headline is Halo. The franchise that launched the original Xbox in 2001 will no longer be led by Halo Studios. Instead, Activision is assembling a new, purpose-built team to develop the next Halo game. Microsoft stressed that this team is separate from Activision's Call of Duty development and plans, so the move shouldn't pull resources away from Call of Duty.
Halo Studios isn't disappearing entirely. A small team will stay on to support the Halo community and the games already on sale, including the Halo: Combat Evolved remake released this year.
Halo Studios, known until 2024 as 343 Industries, has run the series since Bungie left in 2010. Its games, including Halo 4, Halo 5: Guardians and Halo Infinite, sold well but never recaptured the cultural impact of the Bungie era, and Halo Infinite's post-launch support drew heavy criticism. In 2024 the studio rebranded and moved future development to Unreal Engine, in a bid to ship games faster. This week's decision shows Microsoft has chosen a bigger reset: giving Halo to the publisher with the most experience of running a blockbuster shooter.
In a statement, Activision said its goal is to make "the greatest Halo game ever" while staying true to what made fans love the series. No release window or platforms have been announced.
Rare and World's Edge also join Activision
Activision's role grows well beyond Halo. Rare, the British studio behind Banjo-Kazooie, GoldenEye 007 and the long-running live-service hit Sea of Thieves, is moving under Activision. So is World's Edge, which manages the Age of Empires series, including Age of Empires IV and the Definitive Editions of the classics.
Microsoft hasn't announced any changes to Sea of Thieves or Age of Empires updates, and both teams keep their current games.
Obsidian moves under Bethesda
Obsidian Entertainment, known for Fallout: New Vegas, The Outer Worlds, Pillars of Eternity, Avowed and Grounded, now reports to Bethesda. Obsidian keeps its current projects, including Grounded and a new Fallout project it's making with Bethesda Game Studios. That collaboration was confirmed in July.
For fans, this is the most encouraging part of the announcement. Obsidian made what many consider the best modern Fallout game, and putting it alongside Fallout's owner should make that project easier to coordinate.
Forza teams merge, and King takes over casual games
Two smaller changes round out the announcement. Playground Games, the UK studio behind Forza Horizon and Fable, is merging with Turn 10, the Redmond team behind Forza Motorsport. Microsoft describes the two as long-time creative partners, and the combined studio will focus on the Forza and Fable franchises.
Meanwhile, Microsoft Casual Games, the team behind Solitaire, Minesweeper and other built-in Windows classics, moves under King, the Activision Blizzard studio that makes Candy Crush. Both teams specialise in casual games that are played daily and updated constantly, so the pairing is a natural fit.
Ninja Theory faces closure after two sales fall through
The hardest news is for Ninja Theory. The Cambridge, UK studio, which Microsoft bought in 2018, is best known for the BAFTA-winning Hellblade: Senua's Sacrifice and its 2024 sequel, Senua's Saga: Hellblade II.
Ninja Theory was one of several studios Microsoft put up for sale earlier this year. Booty confirmed that two separate agreements to sell it have fallen through. Microsoft has now begun consulting staff on a proposed closure, as UK employment law requires, while it keeps exploring other options. That means closure is not final yet, but the outlook is uncertain.
Other studios in the sale process have fared better. Double Fine (Psychonauts) and Compulsion Games (South of Midnight) became independent again in August, and Undead Labs will release State of Decay 3 through a new publisher. Arkane Lyon (Dishonored, Deathloop) is still in consultation, which is expected to run until the end of 2026.
Where every Xbox studio stands now
Activision: the new Halo team, Rare, World's Edge, plus its existing Call of Duty studios
Bethesda: Obsidian, alongside Bethesda Game Studios and the rest of ZeniMax
King: King and Microsoft Casual Games
Xbox Game Studios: Playground (now including Turn 10), The Coalition, inXile and Xbox's publishing team
Halo Studios: a small team supporting Halo games already on sale
Independent: Double Fine and Compulsion Games
New publisher: Undead Labs (State of Decay 3)
Undecided: Ninja Theory (proposed closure) and Arkane Lyon (consultation until the end of 2026)
What it means for players
Your games aren't going anywhere. Halo, Sea of Thieves, Age of Empires, Grounded and the Forza games will all continue to be supported by their new teams. Microsoft's memo doesn't announce any changes to Game Pass or Xbox hardware.
The next Halo is likely years away. A new team is only now being assembled, so don't expect a release soon.
Fallout fans have the most to be excited about. Obsidian and Bethesda are now working under one roof on a new Fallout project.
Hellblade's future is uncertain. If Ninja Theory closes, the series could be paused or handed to another team.
Our take
This isn't just a round of layoffs. Microsoft is reorganising Xbox's studios under a handful of big publishing labels (Activision, Bethesda, King and a smaller Xbox Game Studios), each built around its biggest franchises. The upside is clearer ownership and fewer layers of management. The downside is that the Xbox brand is fading from many of the studios that once defined it, and hundreds of developers have lost their jobs. The real test will be whether the new structure delivers better games, starting with the next Halo.
Details in this article come from Microsoft's official announcement on Xbox Wire, published September 22, 2026. For more gaming news, visit our gaming section.
