The changes place one of Xbox’s defining franchises inside a broader consolidation of Microsoft’s game-development operations. They also follow a restructuring Microsoft announced in July, when it outlined approximately 3,200 workforce reductions throughout fiscal 2027. For players, the immediate news concerns the organization behind the games; for employees, it is another round of consequential changes within that organization.
Activision takes the next Halo game without absorbing it into Call of Duty
The most important detail in the Halo handover is the structure of the development team. Variety, quoting Matt Booty, reports that the next game will be “led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty.” That wording identifies Activision as the responsible organization without assigning the project to a named Call of Duty studio.
That is a meaningful boundary. An Activision-led Halo project could easily be interpreted as a reassignment of an existing Call of Duty development operation, but the reported announcement describes a distinct team. It provides no basis for naming Infinity Ward, Treyarch, or Sledgehammer Games as Halo’s developer, or for predicting that Halo will adopt another franchise’s release schedule or design.
The arrangement also divides new development from existing-game support. Booty’s message says a small team at Halo Studios will continue supporting the Halo community and games already in market. The announced division of responsibility therefore leaves an ongoing role for Halo Studios while placing the next title elsewhere. It gives players an identifiable support organization, although it supplies no detailed commitment about update frequency or the duration of support.
Activision’s expanded remit extends beyond Halo. Both Variety and The Verge report changes involving Rare and World’s Edge, with The Verge identifying Sea of Thieves and Age of Empires alongside Halo in the reshuffle. Taken together, these moves make this a broader reorganization of franchise oversight, with Halo as its most conspicuous development assignment.
The Xbox layoffs follow a restructuring already scheduled across fiscal 2027
According to The Verge, Microsoft is laying off around 268 Xbox employees in the September restructuring. That figure accompanies the change in studio responsibilities, making the handover part of a personnel and organizational reset rather than an isolated creative announcement.
Microsoft’s July 6 Xbox Wire message supplies the relevant baseline. It announced plans to reduce the workforce by approximately 3,200 throughout fiscal 2027, including approximately 1,600 immediate role eliminations. Microsoft explicitly described a year-long process and said it could not make all the necessary changes in a single day.
The September number should therefore be read alongside that earlier plan, not automatically added on top of it. The available reporting does not resolve whether these approximately 268 positions sit within the announced fiscal-year total. Treating them as an entirely separate increase would produce a cumulative figure the evidence cannot support.
The July announcement also explained Microsoft’s intended operating changes. It called for reducing management layers to no more than five, and where possible three, while simplifying tools, sharing services, and reducing vendor spending. Microsoft presented those changes as ways to shorten decisions and clarify responsibility.
That context helps explain the organizational logic of placing additional studios and franchises under Activision. The inference is that Microsoft is using larger operating groups to concentrate responsibility. Whether that arrangement improves game development will depend on execution; the reporting establishes the reassignment, not its eventual results.
Halo players should separate development news from purchase decisions
Players considering hardware or subscriptions should wait for the next Halo game’s actual release and platform announcement before making a purchase around it. A change in the responsible development organization supplies no compatibility information, PC requirements, or subscription entitlement.
The reporting also leaves the project’s identity insufficiently defined to connect it confidently to a particular previously discussed Halo release. Calling it “the next Halo game” preserves the announcement’s scope. Assigning it a subtitle, a release window, or a specific campaign or multiplayer format would go beyond the evidence.
Microsoft’s July reassurance about cancellations has a similarly important boundary. At that time, the company said none of its publicly announced first-party games or projects were being cancelled as part of those July reductions. That statement describes the July action; it is not a blanket guarantee covering every later restructuring decision.
The concrete takeaways are these:
- Activision will lead development of the next Halo title through a new, purpose-built team separate from ongoing Call of Duty work.
- A small Halo Studios team will continue supporting the existing Halo community and games in market.
- The approximately 268 reported September layoffs should not be added to July’s planned 3,200 reductions without clarification about how the figures overlap.
- Windows PC availability, console availability, release timing, and subscription access remain unannounced in this reporting.
- Existing-game support and responsibility for a future release are separate assignments, so the handover alone is no reason to infer an immediate change to a player’s current library.
Xbox is concentrating responsibility before showing the next Halo
The broader significance is clearer than the product implications. Microsoft is giving Activision responsibility for a major Xbox franchise while expanding its oversight of other studios, at the same time that Xbox continues reducing its workforce. This concentrates more development responsibility within one of Microsoft’s publishing organizations.
Microsoft’s stated July objective was a simpler structure with clearer accountability. The Halo arrangement gives that ambition a concrete expression: Activision takes the next game, while a smaller Halo Studios operation supports what players already have. The structure identifies responsibility more clearly than it answers questions about the game itself.
For now, the informed decision is to recognize the organizational change without treating it as a product announcement. Activision’s next substantive Halo disclosure—identifying the team, the project, and its intended platforms—will give players the information needed to plan around the release. Until then, the confirmed consequence is a new development home for Halo’s future alongside another painful reduction in Xbox’s workforce.
Update: Microsoft confirms 268 Xbox cuts and says restructuring is about 75% complete (September 22, 2026)
Microsoft has now officially confirmed that it is eliminating 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management and central-functions layer. The company says the action puts it “roughly three-quarters” of the way through its previously announced restructuring, according to Xbox Wire as reported by XDA Developers.
That clarification turns the previously reported September reduction into a confirmed component of the broader fiscal-2027 plan rather than a figure based solely on outside reporting. It also provides a clearer indication that further workforce changes may still be ahead before the restructuring concludes.
Microsoft’s statement likewise confirms the organizational assignment: Activision will develop the next Halo title through a newly created team separate from Call of Duty work, while a small Halo Studios team remains responsible for supporting Halo games already on the market.
Update: Xbox reorganization reportedly adds Bethesda, King, and major studio changes (September 22, 2026)
According to MobileSyrup’s account of Matt Booty’s staff memo, Xbox’s restructuring reaches beyond Halo, Rare, and World’s Edge. Bethesda is set to expand to include Obsidian, while King will take in Microsoft Casual Games. Booty reportedly said Obsidian will continue work including Grounded and a new Fallout project with Bethesda Game Studios.
The memo also reportedly merges Playground Games and Turn 10 into a single studio focused on the Forza and Fable franchises. That is a more direct operational consolidation than the earlier franchise-oversight changes and could affect how Xbox allocates development resources across two of its largest racing and role-playing properties.
MobileSyrup further reports that Undead Labs has transitioned under terms similar to Double Fine and Compulsion Games, while State of Decay III remains planned as a day-one Xbox Game Pass release. Two proposed agreements involving Ninja Theory reportedly fell through, prompting consultation on a possible closure; consultations involving Arkane are expected to continue through the end of the year.
Update: Ninja Theory reportedly shuttered as Activision’s Halo plans take shape (September 22, 2026)
The Hollywood Reporter reports that Ninja Theory is being shuttered, a more definitive outcome than the earlier consultation process reported around the Xbox reorganization. Microsoft has not separately published a public confirmation in the material cited by the outlet, so the status should be treated as reported rather than formally announced by the company.
The report also adds that Activision’s next Halo project is expected to be a full-featured, mainline franchise installment. Activision president Rob Kostich said the company has already started assembling the purpose-built Halo team and described its objective as delivering a game that remains true to the elements players value in the series.
These details still do not establish a title, release window, platforms, or whether the game will be included with Game Pass.
Update: Additional details (September 22, 2026)
GamesRadar+ reports that former Blizzard president Mike Ybarra praised the Activision handover, calling it “the best news in a decade plus” for Halo fans. Ybarra specifically highlighted Activision president Rob Kostich, development head Dave Stohl, and Call of Duty creative lead Pat Kelly, but his comments are personal opinion rather than a Microsoft or Activision commitment.
The outlet also reports that Matt Booty plans to discuss the restructuring’s progress at an Xbox all-staff town hall scheduled for October 6. That could be the next internal milestone for further details, although Microsoft has not announced that the event will include public news about Halo’s team, platforms, release timing, or Game Pass plans.
Update: Additional details (September 22, 2026)
Game Developer reports that Blizzard was not included in this round of announcements. The outlet viewed an email from a senior Blizzard leader telling employees they were not impacted, and says an Xbox representative confirmed the email was legitimate.
That confirmation applies specifically to the September 22 actions, rather than guaranteeing Blizzard will be unaffected by any later changes in Microsoft’s broader fiscal-2027 restructuring.
Update: Additional details (September 22, 2026)
According to Rock Paper Shotgun, Undead Labs has become an independent, employee-owned studio and has secured a new publisher for State of Decay 3. The outlet says the game is still targeting a 2027 release.
Those details add specificity to the earlier report that Undead Labs had moved to an arrangement similar to Double Fine and Compulsion Games. They do not alter the previously reported plan for State of Decay 3 to launch into Xbox Game Pass.
Update: Additional details (September 22, 2026)
TechSpot reports that Halo Studios’ remaining support role specifically includes Halo: Campaign Evolved and Halo: The Master Chief Collection, while Activision’s new team handles the next title.
The outlet also says Obsidian will continue work on Grounded 2 under Bethesda, alongside its collaboration with Bethesda Game Studios on a new Fallout project.
Update: Halo Studios cinematic director says he was laid off after a promotion (September 22, 2026)
GamesRadar+ reports that Josh Daniels, formerly Halo Studios’ cinematic director, said he was among the employees affected by Microsoft’s latest Xbox reductions. In a LinkedIn post cited by the outlet, Daniels said he had been “promoted and laid off in the same week,” and is now seeking cinematic direction or production work.
The disclosure provides a more specific indication of the roles affected at Halo Studios as its responsibilities narrow to supporting existing games while Activision assembles a team for the next Halo title. Microsoft has confirmed the broader 268-role reduction, but it has not publicly detailed Daniels’ position, the timing of his promotion, or the full extent of cuts within Halo Studios.
Update: Double Fine and Compulsion reportedly return to independence (September 22, 2026)
Press Start Australia reports that Double Fine and Compulsion Games have returned to independent status as part of Xbox’s restructuring. That adds a clearer outcome for both studios than the earlier description of Undead Labs moving to terms similar to theirs: they would no longer operate as Xbox-owned first-party teams.
The report also characterizes the announced changes as taking effect immediately. For Windows players, that does not itself confirm changes to existing PC releases, Game Pass availability, or future platform plans for either studio’s projects. Those decisions would depend on the studios’ new publishing arrangements.
Update: Xbox memo confirms Compulsion and Double Fine retained their IP after becoming independent (September 22, 2026)
Microsoft’s “Continuing Our Reset” memo adds a more specific detail on the status of Compulsion Games and Double Fine. As reported by Exputer, Matt Booty said both studios returned to independent management in August with their intellectual property and back catalogs intact.
That goes beyond earlier reporting that the studios had left Xbox’s first-party structure: the memo indicates Microsoft did not retain control of their existing game libraries or underlying franchises as part of the transition. It also frames the move as a completed divestiture rather than an ongoing consultation or proposed sale.
The same memo confirms that Undead Labs has completed a comparable transition to a new publisher while keeping State of Decay 3 on track for a day-one Game Pass launch. It does not, however, announce any new Windows release plans, Game Pass terms, or publishing arrangements for future projects from Double Fine or Compulsion.
Update: Undead Labs reportedly confirms layoffs after its move to independence (September 23, 2026)
ScreenHub Australia reports that Undead Labs management confirmed on LinkedIn that the studio’s transition to independence includes a “significant number” of layoffs. The report adds an employee-impact detail that was not part of the earlier restructuring disclosures.
The studio’s new independent status remains separate from the fate of State of Decay 3, but the report does not provide a number of affected employees, identify teams involved, or clarify whether the reductions change the game’s reported 2027 target.
For Windows players and Xbox administrators tracking the reset, the development reinforces that studio divestitures are also involving workforce reductions—not solely changes in ownership or publishing structure.
Update: State of Decay 3 reportedly adds closed beta and PS5 plans (September 23, 2026)
GameMeca reports that State of Decay 3 is scheduled for a closed beta later in 2026 ahead of a reported 2027 launch on Xbox, Windows PC, and PlayStation 5. If accurate, the PS5 detail would mark a clearer cross-platform plan than the earlier restructuring disclosures established.
The report also says employee-owned Undead Labs remains responsible for the game following its separation from Xbox. Microsoft and Undead Labs have not independently announced the beta timing, PlayStation availability, or a final release date, so those details should be treated as reported rather than confirmed.
