Xbox Cuts 268 Jobs as Activision Takes Over Halo in Major Studio Reshuffle

The column is opinion, but the news behind it is confirmed. Xbox cut another 268 jobs, moved development of the next Halo to Activision, and handed several first-party studios to its larger publishing arms. Here's what Microsoft actually said, how that differs from the hotter takes, and what comes next.

What Microsoft announced on September 22​

The details come from an internal memo by Xbox Chief Content Officer Matt Booty, which Microsoft also published on Xbox Wire under the title "Continuing Our Reset." The memo said Xbox is "eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer." According to Booty, the work done since July, including the studio divestitures, puts Xbox "roughly three-quarters of the way through previously announced restructuring."

The memo doesn't say how the 268 cuts are split by studio, location or job type. As The Next Web put it, Microsoft's own memo gives only the 268. GeekWire later added an update saying a filing made public Thursday put the official total in the state at 277 jobs. That refers to Washington State. The public reporting doesn't explain why that figure is higher than the global 268, so treat the two numbers as separate data points rather than trying to reconcile them.

Booty's stated reason for the reorganization: "The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise." That's Microsoft's explanation. Whether the reshuffle achieves it remains to be seen.

Section summary: The 268 cuts are one stage of a restructuring announced in July, not a new plan. Microsoft hasn't said where the cuts fell beyond naming Halo Studios, other first-party studios and XGS management.

Who now reports where​

Booty's memo lists these changes:

For Windows users, the King change is the closest to home. The Hollywood Reporter noted that the King business (Candy Crush) is taking in Microsoft Casual Games (Solitaire, Minesweeper). Those are the games that have come with Windows for decades. The memo describes a change in who runs the team. It says nothing about changes to the apps, and nothing in the reporting suggests anything is changing on your PC.

On Halo, Activision President Rob Kostich said in a statement that the aim is to "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." He added that Activision has "already begun assembling a purpose-built team." The Hollywood Reporter says it was told the project will be a full-feature, mainline installment into the franchise. Microsoft hasn't given a release window, a platform list or any names from the new team.

TechSpot reports that Halo Studios will focus on already-released entries such as Halo: Campaign Evolved and Halo: The Master Chief Collection. GeekWire adds that the smaller Redmond team will support existing Halo games, the community and esports.

Section summary: Halo Studios still exists, but new Halo development has moved to Activision. Rare and World's Edge now answer to Activision, Obsidian to Bethesda, and Microsoft Casual Games to King.

The divestitures: a mixed scorecard​

The July plan named several studios that would be sold or spun out. They have ended up in different places:

• Compulsion Games and Double Fine became independent in August, keeping their IP, back catalogs and runway funding.
• Undead Labs moved out on similar terms. Game Informer reports it has a deal with a new publisher, but will still release State of Decay 3 on Game Pass when it launches next year. The memo doesn't name the publisher.
• Ninja Theory is in trouble. According to Quartz, deals with two different prospective buyers collapsed, leaving Xbox to open a formal consultation process with Ninja Theory staff about shutting the studio down, even as it keeps looking for alternatives.
• Arkane: Negotiations over the future of French studio Arkane are ongoing and expected to run through year-end.

The reporting disagrees on Ninja Theory. The Hollywood Reporter's summary says Ninja Theory is being shuttered, but Booty's memo describes a proposed closure that is going through employee consultation while Xbox keeps looking at other options. Based on Microsoft's own wording, the studio's closure is proposed but not final.

How this fits the bigger reset​

The 268 cuts belong to the plan Xbox CEO Asha Sharma announced on July 6. She called it the largest restructuring in Xbox history: about 3,200 roles cut over fiscal 2027, around 1,600 of them immediately, and four studios moving to new management. Quartz describes the 3,200 figure as about 20% of its staff.

Sharma was blunt about why. In her memo, she said Xbox runs at margins three to ten times lower than comparable platform and publishing businesses, and that in a typical year it lost 64 cents for every dollar invested. Those are Microsoft's own numbers, not audited figures. The same July memo said no publicly announced first-party games or projects were being cancelled in that round of cuts.

Some coverage has the scale wrong. TechSpot suggested the new cuts were presumably part of the 1,600 set to occur through July 2027. Sharma's memo actually describes about 1,600 cuts on day one, inside a total of about 3,200 across the fiscal year. Keep those two numbers separate.

Weighing Polygon's argument​

Welsh makes three points worth separating.

Polygon says Xbox Game Studios has been hollowed out. Welsh writes that XGS now "comprises just three studios" and has gotten the same "vestigial rump" treatment as Halo Studios. Neither Microsoft's memos nor the other coverage gives a current XGS roster, so the three-studio count is Polygon's own tally. It could well be right after this many transfers, but it isn't an official figure.

Polygon says power has moved away from the Xbox brand. This is Welsh's most interesting point. Sharma has talked about refocusing on the console business, yet Halo, Xbox's founding franchise, is going to Activision, a publisher that has always released on multiple platforms. Rare and Obsidian are also now housed under historically multiplatform publishers. For readers who care about what "an Xbox game" means, that is a real change in identity, even though the games stay inside Microsoft.

Polygon's fair counterpoint. Welsh also admits Halo Studios (formerly 343 Industries) "never really worked out," that XGS wasn't producing hits, and that "carrying on wasn't really an option." That's an honest caveat. The case for the move is simple: Activision has run a huge annual shooter pipeline for two decades, which is exactly the kind of production machine a mainline Halo needs. The case against is just as simple. Big reorganizations often slow down the games already in progress, and Welsh asks whether "this much change, this fast" can be good for them.

There isn't enough information to answer that yet. None of the public reporting mentions delays or cancellations tied to this round of changes, and there's no timeline for merging Playground and Turn 10. Predicting a lost Forza generation or a doomed Halo would be guessing.

What to watch next​

• October 6 town hall: Booty said Xbox staff will meet as one team to look back on progress and preview the lineup he describes as among the strongest in Xbox history. TechSpot notes that is the day before Microsoft's first Surface event in more than two years. Windows and PC hardware followers should watch that week.
• Ninja Theory's consultation: will a third buyer show up, or does the proposed closure go ahead?
• Arkane's future: the consultation is expected to run through the end of 2026.
• The next Halo's team: who Activision hires or moves onto the project will say a lot about how seriously it is taking the "greatest Halo ever" promise.

The bottom line​

Welsh ends on hope rather than despair: people keep making great games despite everything. For Xbox players, the confirmed facts are these:

• Halo's future is now in Activision's hands, with a smaller Halo Studios supporting the current games.
• State of Decay 3 is still headed to Game Pass on day one, under a new publisher.
• Ninja Theory's future hangs on the consultation, and Arkane's won't be settled before the end of 2026.

Everything else, including whether all this rescues Halo or just reshuffles who runs it, depends on games that haven't been shown yet.